3 Investment Opportunities In Distress Periods

f after carrying out a detailed analysis and you do see it as a good opportunity to buy, then there is a truth that some stocks are better than others.

It the no news that the markets and economies at large have been highly volatile. With the level of uncertainty around because of the ongoing pandemic that is Covid-19 as well as all the challenges it has posed, speculations are at an all-time high.

More so, the dwindling oil market has also shown that the world economy might take a few more dips until things settle. In our last post, we considered whether moments of uncertainty and volatility, having little or no growth in the market presents an opportunity to invest or not.

We also considered whether it was better to invest now and face the risk of further losses or to wait until later when the markets have rebound and lose the opportunity to buy more.

If after carrying out a detailed analysis and you do see it as a good opportunity to buy, then there is a truth that some stocks are better than others.

Here are some of the kinds of companies you should be thinking of:

Stable, Large Cap Companies

When we say the stock market always returns to the norm, the truth is that it doesn’t apply to all stocks. When you invest in overvalued companies or companies that don’t have the right fundamentals to withstand storms, anything can happen.

Large capitalization companies are said to have market capitalization of $10 billion or more. They refer to the companies that have been stable for decades, reached and sustained a level of profitability, and generally consistently pay dividends.

The idea is that since they are stable and have a sustainable share of the market, brand loyalty etc, even when market forces of demand and supply play against them, they will eventually come out strong.

Speculative Technological investments

Even with the unfavourable terrain across the world in different forms, one thing that has remained clear is that technology has come to stay. With the new face of work that involves remote or virtual working, technological tools and apps are now in high demand.

One of the companies that has experienced the wave is Zoom. For the first time, the founder has been listed as a billionaire because of this. While this too is a risk, the idea is that by investing in the new direction of business, you are buying into a system that has huge potential.

Companies/Industries that provide essentials

No matter how many companies crash and how many businesses have to slow down, companies that provide essential services will go on. This is simply because people cannot survive without them.

Companies like these include those in telecommunication, those in the agricultural industry etc. Companies like Walmart that sell essential home products have also ‘Clorox’ selling cleaning agents have also made great returns during the coronavirus pandemic.

While there are other variables involved, investing in companies like these will give such stocks an opportunity for further growth as a result of increased demand.

It is, however, pertinent to note that volatility is normal in the market and no stock is too strong to witstand market tactics. But they allow you curb your losses helps in the long run.

Written by Lawretta Egba.