The stock market crash of 2020 provides many opportunities that don’t come along very often. Although some sectors are still struggling – such as travel, banking and oil – there are pockets of the market that have not only recovered from this year’s crash but are significantly outperforming it.
Millions of workers were furloughed, and many more were asked to work from home, and this huge shift in working patterns is having a profound impact on some companies. Three areas that have benefitted from this trend include IT services, stock broking services and gaming. I believe these sectors could continue to do very well this year and beyond.
3 hot stocks in 3 hot sectors
It’s not too late to invest to make the most of this year’s stock market crash. I would invest £5k in these UK shares this month:
Softcat is one of the leading UK providers of IT infrastructure products and services. Its share price is breaking out to new all-time highs and I believe it will continue to grind higher. Softcat is a good quality company, with a predominantly UK based market. It has won market share over the years, and there is still further growth to come from businesses migrating to the cloud. With a return on capital of 78%, double-digit growth, and strong share price momentum, this UK share is one I would buy.
I find whenever there is a stock market crash, there is increased interest in investing. This year is no different. One company benefiting from this interest is Hargreaves Lansdown. This UK-based investment platform is the market leader. On Friday morning it reported an increase of 188,000 new clients this year, bringing total active clients to over 1.4 million. It supported a record £7.7bn of new business. In recent years it has noticed that clients are joining the platform at a younger age. With a keen eye on technology, it continues to invest and is well placed to adapt to its new clientele.
The gaming sector was growing well even before Covid-19, lockdowns and the stock market crash, but this year I believe the sector will see a further boost from the increased interest in online games. Industry sources suggest that total gaming revenue is expected to increase from $152bn in 2019 to $196bn in 2022. One games creator that I think is worth investing in is Team17. Founded in the 1990s, it is mostly known for its Worms franchise. Since then, it has diversified and created over 100 premium games. With a lucrative business model, generating high operating margins of 30%, return on capital of 22% and delivering annual earnings growth of 12%, this mid-sized games creator is well positioned to capitalise on this growing trend.
In summary, rather than fearing the stock market crash, I’d recommend looking for value at high-quality companies trading at depressed prices.