Staying ahead of the times is usually a good thing for investors. If you can see which way consumers are heading before nearly everybody else does you can cash in on your early vision. It's like having the winner to next year's Super Bowl -- or knowing whether or not there will even be a Super Bowl next year.
Some trends that I see intensifying as we head into 2021 include craftsmanship, suburbanization, and telehealth. It's worth elaborating on all three trends, and I have a couple of stock picks that I think are positioned well to be beneficiaries.
Image source: Getty Images.
Craftsmanship
If there's a silver lining to this very ugly pandemic it's that it has given us more time than we usually have to spare. Time is obviously a dangerous gift in the wrong hands, but for a lot forward-thinking individuals, the shelter-in-place phase of the coronavirus crisis has been a time to take up new hobbies or brush up on a skill set.
In short, we are collectively craftier now than when we were at the start of the COVID-19 calamity. Some of the companies to watch in this space include Pinterest (PINS -0.64%), Etsy (ETSY 0.49%), and even Blue Apron (APRN).
The appeal of Pinterest is fairly obvious. The visual search engine has become a gathering place for folks sharing recipes and inspirational tips on home decor, beauty, and fashion. Monthly active users have soared 39% to 416 million over the past year, with most of those gains coming from abroad. Revenue rose a mere 4% in its latest quarter as advertisers initially scaled back their spending during the pandemic, but Pinterest also revealed earlier this month that the current quarter kicked off with a 50% year-over-year surge in revenue for the month of July.
Etsy is where crafty Pinterest users can monetize their talents. The online marketplace for handmade arts and crafts was growing at a healthy clip before the coronavirus crisis. Revenue rose 36% last year, climbing 35% in the first quarter of 2020. Etsy has floored it through the pandemic. Revenue skyrocketed 137% in the second quarter. An overnight demand for unique face coverings has been a big part of this story, but even outside of customized masks, we're seeing Etsy's business accelerate.
Finally, Blue Apron has spent most of its publicly traded life in the market's doghouse, but after 10 quarters of declining revenue, the gourmet meal kit provider finally came through with a 10% top-line increase in its latest quarter. The average number of orders per member is the highest it's been in five years. We've discovered a love for cooking this year, and that's not going to fade away when it's safe to eat out more often.
Suburbanization
There was a trend over the past few years of folks ditching the suburbs for major metropolitan city living. The urbanization movement was fueled by younger adults who wanted bustling scenes with mass transit solutions to use instead of owning a car. We're seeing the pendulum swing the other way now, and two stocks to watch here are Invitation Homes (INVH 0.49%) and American Homes 4 Rent (AMH 0.53%).
Invitation Homes and American Homes 4 Rent acquire single-family homes -- largely in the suburbs -- that they turn around and lease. Renting out homes is the kind of business one typically associates with individual homeowners leasing out properties they couldn't sell, but the key with these two players is scale. Invitation Homes and American Homes 4 Rent owned 79,256 and 53,000 homes, respectively, at the end of June. When Invitation Homes enters a market, it can snap up as many as 5,000 homes.
Now is probably a good time to get into the renewed interest in suburban living. The COVID-19 outbreak sent folks scurrying from workplaces, and the same can be said for the small apartments in high-rises in major cities that they were overpaying to rent. With more companies now comfortable with folks working from home -- and the need for more space without noisy neighbors upstairs and next door to conduct company meetings from home -- the suburbs are back in fashion.
You may think that Invitation Homes and American Homes 4 Rent are ripe with vacancies and deadbeat renters these days, but that's not the case. Occupancy levels are north of 95% and the same can be said about their collection rates. They also pay modest dividends.
Telehealth
Some of the hottest stocks earlier this year were next-gen healthcare disruptors. Telemedicine leader Teladoc Health (TDOC -2.91%) and applied health signals pioneer Livongo Health (LVGO) were rock stars -- until they decided to put a ring on it. Shares of Teladoc and Livongo have plummeted 23% and 17% respectively in the seven trading days since announcing plans to join forces in a deal initially valued at $18.5 billion. The market doesn't like the combination that's expected to close later this year.
It's hard not to like the potential of the combined company, especially as Teladoc's platform gets put to use with Livongo's growing base of members with chronic conditions. The ability to provide what in some cases is superior medical attention remotely is a game changer that grew up during the pandemic, but telehealth is going to be an even more potent theme in 2021. There's no turning back now.
