WFH Stocks Are Adding Sheen to Investors’ Portfolio

Companies that offer online tools to enable people to work from anywhere have recently been the toast of the market.

By: Ashutosh Sinha

Millions of people around the world are having to work from home. Conferences and seminars have stopped and that has made organizers move it online. With a large part of the world cautious about moving out of homes, office video meetings are happening every day. After trying such productivity tools for the first few weeks, people are now happy to pay for them too.

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It could be the story of any professional working in the US. Or, virtually, from any part of the world too. With such a tectonic shift in working space happening, companies are finding out newer ways of making people work from anywhere. It is generating new collaborations, products, and services.

The shift towards work from home has well begun. If you too are making use of one or more of these products and services, why not invest in them too?

Companies that offer online tools to enable people to work from anywhere have recently been the toast of the market. Even a giant like Microsoft, Google, IBM, HP, and others with their offerings that allow teamwork are enjoying the rub-off effect. Microsoft, for example, has seen the usage of Teams, its video calling offering, spike sharply.

“There is both, an immediate surge in demand and systemic structural changes across all of our solution areas that will define the way we live and work going forward,” CEO Satya Nadella said during the quarterly earnings call last month.

The emerging opportunity is so noticeable that a new thematic exchange-traded fund (ETF) is being set up by a company called Direxion. It has already informed the Securities and Exchange Commission (SEC) about it. The ticker symbol for the ETF, predictably, is WFH.

Here’s What The New “Work From Home” ETF Will Look Like. Source: Street.com

The ETF will track investments in the industries that are supporting remote work – remote communication, security and cloud technologies. Since these are the early days for the shift that is happening, there might be other emerging opportunities that the ETF may also track. These could be tracking other products or services companies that may have an offering later.

With work from home taking off in a big way around the world, Direxion’s first of its kind offering could well be lapped up by the markets and investors.

As more companies connect their employees with these innovative tech solutions, and with other platforms too, technology is the glue that puts it all together. The new tech service providers, usually smaller companies, have ushered in a new era of working with their innovative products. The large companies have led the change and the reality of pandemic has converted it into a trend.

The usage for the platforms for cloud storage, security as well as productivity tools are, proverbially, already bursting at the seams. During its quarterly earnings call, Zoom CEO Eric Yuan mentioned that there were several companies that were running operations without any physical office, suggesting that working from home was a change that was here to stay.

Yet, this could be just the beginning. According to the US Bureau of Labor Statistics data for 2018, 26 million Americans, or about 16 per cent of the workforce, spent some of their time working from remote locations. In the last two years, several new collaborative tools and apps have been introduced in the market as working online became more popular. These tools and apps are making it easier than ever before for people to work from anywhere.

Most importantly, companies are open to remote working more than ever before. In its Global State of Remote Work for 2018, Boston based OWL Labs said that 44 percent of the companies around the world did not permit remote working. Its survey had respondents from 23 countries across six continents.

Since the global shift is happening around the way the workplace is organized, mining the data could also be a smart opportunity for analytics companies. Several experts and industry watchers vouch that a bunch of tech stocks are looking ready to ride the cusp of change.

Investing in WFH focused companies

Investing in tech companies that make it possible to work from home or work remotely could be as easy as a few clicks of the mouse.

On the Stockal platform, choosing to buy a stock has been a breeze for investors across India and several countries in the Middle East. While some investors have reposed their faith by putting in buy trades for Zoom, Box, Dropbox, Hewlett Packard Enterprises, and Slack, the overwhelming favorites for buy positions have been for Google and Microsoft. Between April 2019 and 2020, there has been an over 40X increase in the trades for the popular tech stocks.

Microsoft & Google stock charts

Microsoft has found new buyers for its suite of products as work from home turned into a reality. For smart investors, it was an indicator of strong demand and that has pushed the stock higher. It has risen by over 2X of the S&P 500 during calendar 2019. Google has not done as well but its cloud business has been an outperformer. It expects to clock $10 billion in cloud revenues.

WFH trend gathers steam

Cloud-based companies, typically, have a subscription or freemium model for businesses. They get the lowest hanging fruits among customers with their free offering and as customers get used to the offering, the pricing moves up.

There are several companies in sectors like healthcare, communications, education, online security which could register the smartest gains. Businesses like technology, logistics etc. that support these businesses could also reap resultant rewards too.

Companies with no physical offices will be a reality sooner rather than later. Twitter has already announced that it could allow some employees to forever work from home. Google & Facebook employees can WFH until the end of the year.

Another company to join the bandwagon is Shopify. Tobi Lutke, CEO of Shopify, tweeted on Thursday that the company is moving to a work from home model and will keep the offices shut till 2021.

What Tobi Lutke, CEO of Shopify has said.

It is amazing how things change. In 2013, former Yahoo! CEO Marissa Mayer had banned employees from working from home. It has been just a few years and the wheel has come a full circle!