The time to invest in tech is over - back to the old favorites

While tech giants made trillions during the first lockdown, companies like Nestle & Unilever are cashing in now.

Y Rabinovitz ,

KFC container
KFC container
iStock

If you bought stocks in Zoom back in January, you’re probably feeling quite pleased with yourself right now. However, if you were planning on cashing in on your gains, you may have already missed the boat.

That’s because business analysts are predicting – and are already seeing some of their predictions proven true – that the tech market may have reached, or may soon reach, saturation. In other words, anyone who was planning to buy a webcam, get a Netflix subscription, or switch to making household purchases online, has likely done so already.

All the same, share prices of the MAGA four (that’s Microsoft, Apple, Google, and Amazon) are still sky-high. In the first two quarters of 2020, they gained a combined value of over $1.3 trillion. Microsoft was up 31 percent; Apple 25 percent, Google 10 percent, and Amazon over 61 percent.

Beyond these four, other leading tech companies also did extraordinarily well. Zoom was up 280 percent by the end of the second quarter, and Netflix had gained 50 percent. Shopify was up an impressive 141 percent. But there’s good reason to believe that we’ve already seen their best, simply because people don’t change their habits so easily, and those that were willing to do so, have done so already.

So which companies are the ones gaining now? As people contemplate the prospect of a long, dark, isolated winter at home, there is evidence that they are turning to traditional comforts to get by. Companies benefiting from this development include Nestle, with a 3.5 percent increase in sales over the first nine months of this year, which is its fastest rate of increase in six years, The Telegraph reports. Unilever is also doing better than expected, increasing its sales by 4.4 percent. Proctor & Gamble have also reported encouraging figures. And another sector that’s doing well is the restaurant trade. Those businesses that managed to survive the “first wave” of the virus have learned how to deal with the evolving situation and are thriving now. Domino’s is up 36 percent so far this year, and Chipotle is up 60 percent.

In the current economic and social environment, firms with familiar brand names are benefiting from reputations built up over decades – there’s nothing like an element of stability in a rapidly changing, sometimes frightening world. Other businesses doing well despite stiff odds against them are those that are small and dynamic and ready to make sometimes drastic changes in order to adapt and thrive.

And of course the old favorites are on top of things, responding to people’s unstated desires for “the good old” in whatever form it comes. KFC is now marketing its “11 Herbs and Spices Firelog,” ready for a winter spent at home rather than in the mall or the high street. “Although this year may look different,” said KFC’s US chief marketing officer, “people can grab a fried-chicken scented firelog – designed to make your home smell like fried chicken and feel as warm as an Extra Crispy drumstick – order a bucket of chicken from KFC, and savor the tastes, smells, and warmth of what has become our favorite holiday tradition.”



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