If there’s one lesson the corona-crisis of 2020 has taught me, it’s this. You won’t regret holding a big part of your investing portfolio in long-term FTSE 100 purchases. The easiest way to spot these is by assessing which shares clearly have long-term trends in their favour.
There are plenty of examples of such trends around. I’ve talked about extensively in the past about online shopping, but I believe it bears repeating. This is because of two developments we’ve seen this month.
Developments that will impact investing in 2021
The first is the Brexit deal that was struck a few days ago. It means that goods can be assured to move from Europe to the UK without complications at ports or price increases that would arise from a no-deal Brexit. It also means that the UK economy can now, finally, look forward to more stability after over four years of uncertainty. Investors are clearly happy, going by the FTSE 100 rally.
Second, the mutated coronavirus has put quite a dampener on more than just our collective holiday spirit this year. Many parts of the UK under increased restrictions and this may well continue for a while. We don’t know. We also don’t know if the vaccine will be effective now. We only know that it’s far more dangerous and we are safer cocooned in our homes than anywhere else.
What’s going to happen next
Putting these two developments together makes it clear that we will continue to shop online well into 2021. In some respects, we may never go back to bricks-and-mortar stores (there’s just so much more and better choice available online in some cases). As a result, I think we can expect FTSE 100 companies either in this segment or in linked industries to benefit from it. And that’s not just for now, but for a long time to come.
Here are 10 of them among the FTSE 100 constituents alone:
The FTSE 100 online marketplace boom
This one’s a no-brainer. Stocks like the FTSE 100 online grocer Ocado have shown stellar performance in 2020. In fact, I’m so convinced of it that it’s my top stock for 2021 as well. Niche online marketplaces like Auto Trader and Rightmove are two others I think will continue to thrive over time.
Linkage effects from online shopping
Our online shopping spree has a direct effect on demand for packaging materials. The FTSE 100 index has not one but three such companies among its constituents – Mondi, DS Smith, and Smurfit Kappa – all of which can make gains from the trend. There’s also the real estate investment trust Segro, which focuses on warehouses, and whose share price has performed quite well already this year.
The FTSE 100 pivoters
Last but certainly not the least is the pivot among big FTSE 100 retailers to the online space. As a Tesco consumer, I can vouch for the ease in online shopping through its app. I’m eagerly watching how this pivot will continue next year. This goes for J Sainsbury too, which is struggling right now. Also on my radar are non-essential retailers like NEXT, which has reported much of its sales from online purchases recently.