There have been a number of unexpected consequences from the stay-at-home orders that have blanketed the globe. Many of them have been negative, but there've been some beneficiaries from the global lockdown. A small number of industries have reaped the lion's share of the stock market gains over the past several months and will likely continue to benefit for months and years to come.
The companies that are leaders in each of these industries are perfectly positioned to benefit from the powerful societal shifts and demographic trends that were accelerated by the pandemic, and will likely flourish in the coming decade.
Assuming you have an emergency fund to fall back on and $3,000 (or less) in disposable cash you don't need for immediate expenses, here are three industries that are perfectly positioned to harvest the benefits of the paradigm shift that has occurred and that could make you a small fortune over the next 10 years.
1. E-commerce is accelerating
There's little doubt that e-commerce was already increasing in popularity; yet surprisingly, it still accounts for just 11% of retail sales in the U.S. to close out 2019. It's also equally clear that online sales have exploded since the onset of the pandemic, as shoppers are staying home for fear of contracting the coronavirus. Two companies have benefited from the shift to e-commerce far more than the competition, with each enjoying unprecedented gains in their respective businesses: Amazon.com (AMZN -2.78%) and Shopify (SHOP -3.12%).
Amazon's "everything store" became inundated with online shoppers over the past couple of months, with consumers turning out in record numbers to order food and other consumer staples, and have them shipped directly to their doorstep. Amazon initiated two waves of hiring, adding as many as 175,000 new workers in order to meet the unparalleled demand. Sales in the first quarter jumped 26% year over year, while operating income of $4 billion slipped 9%, the result of increased labor costs.
At the same time, merchants without online stores turned to Shopify in droves, driving significant increases to the online stores hosted on its platform. Chief Technology Officer Jean-Michel Lemieux said in mid-April it was experiencing "Black Friday level traffic every day" since consumers began to shutter in place. That translated to revenue that grew 47% year over year in the first quarter, while adjusted net income tripled.
E-commerce was already seeing significant growth, a factor that was only accelerated by the pandemic. Amazon and Shopify are uniquely positioned to gain from the continued adoption of online sales.
2. Videogames are generating record growth
Over the past decade, the popularity of video games has reached epic proportions, with Battle Royale and free-to-play games being the latest entrants to an already booming industry. Growth had paused over the past year but returned with a vengeance as consumers looked to augment their in-home entertainment options.
Video game sales have rocketed higher, as spending on digital titles hit a record $10 billion in March -- the highest monthly total ever recorded -- according to Nielsen-owned Superdata. Premium console revenue and PC revenue both soared between February and March, up 64% and 56%, respectively.
Two companies that are set to capitalize on this trend are Activision Blizzard (ATVI 0.09%) and Take-Two Interactive (TTWO -3.30%). Activision was well-represented with a number of titles in Nielsen's top sellers list, including World of Warcraft, Call of Duty: Modern Warfare, and Candy Crush. Take-Two was also a winner, with titles including Grand Theft Auto V and NBA2K20 making the cut.
Take-Two has yet to report its quarterly results, but Activision exceeded expectations and raised its full-year guidance. The company was off to a slow start this year but got a significant boost in March from the stay-at-home population. That strong trend continued into the second quarter, signaling there are more gains to be had.
With new gamers joining the ranks, many will continue to be gaming aficionados once the stay-at-home orders are lifted.
3. The future will be streamed
One of the biggest beneficiaries of consumers exiled at home has been the already robust streaming video segment. Cord-cutting was already reaching epic levels, with the biggest pay TV providers losing more than 4.9 million customers in 2019, the largest single-year decline in cable TV history, according to Leichtman Research Group. Abandoning cable accelerated from losses of 2.87 million in 2018 and 1.49 million in 2017.
Consumers ditching pay TV aren't giving up viewing, with the majority turning to streaming video for their entertainment fix. Both Netflix (NFLX -0.90%) and Roku (ROKU -4.07%) are in the catbird seat and stand to attract the majority of streaming eyeballs, with even more making the switch due to the pandemic.
Netflix released first-quarter results that were mind-boggling. The streaming giant added 15.8 million new subscribers, more than double the 7 million it forecast, and increasing 23% year over year. Subscribers in the company's more mature North American market jumped as well, with paid net additions climbing by 23%, while these new customers pushed revenue nearly 28% higher.
Roku's results were also energized, as active accounts grew 37% and streaming hours jumped 49%. Many thought revenue would be hard hit by slumping ad rates, though that didn't come to pass. Advertising generates the majority of Roku's revenue, and the company is still optimistic for the future. Overall revenue grew 55% year over year, while platform revenue -- which is made up of advertising, The Roku Channel, and Roku smart TV operating system licensing -- grew 73%.
Winners keep winning
Each of these industries -- e-commerce, video games, and streaming video -- has already produced significant gains over the past 10 years, but winners tend to keep winning. These strong societal and demographic shifts continue to play out and favor continued adoption of these trends in the coming years -- even though each has gotten a boost from the consumers sheltering at home.
These companies hold a particularly strong position in their respective industries and -- taken together -- could make investors a small fortune in the decade to come.