Shailesh Dash


Sunset in the mountains

The 26 stocks recommended over the past five months have seen stellar returns, states entrepreneur and investor Shailesh Dash, who shares his market perspective in this monthly column

2020 has witnessed extreme volatility in global equities, especially during the past six to eight months.
However, investors who have been prudent and remained invested with long-term objectives are clearly reaping the benefits. Additionally, investors that were more forward- looking and identified sectors likely to
benefit from the pandemic enjoyed superior returns during this period. Sectors such as e-commerce, fintech, cloud computing, healthtech and medtech, as well as online gaming and streaming emerged as game
changers. Stocks within these verticals witnessed continued buoyancy, supported by strong fundamentals , proven resilience and attractive growth prospects. During the past five months, a total of 26 stocks were recommended to capitalize on strong fundamentals and expected earnings over the next three to four years. Cumulatively, these 26 stocks have risen by 25.9 per cent between September to mid December (annualized return of 135.6 per cent) compared to a 7.7 per cent and 7 per cent rise in the MSCI World index and Nasdaq, respectively. For example, someone investing a total of $100,000 with equal allocation in the 26 stocks would have witnessed an increase in portfolio value to $125,898 as of December 15, 2020. Below, we have analysed each sub-sector within the broader technology space to understand the reasons for their strong performance.

Healthtech and medtech: The healthcare industry witnessed a mixed year in 2020, as investors weighed in the impact of reduced doctor visits and delayed elective surgeries and procedures, against an uptick in demand for digital healthcare and optimism around a vaccine. With the latter’s premise posing
the only way to return to normalcy, markets are shoring up investment in healthcare and recommended stocks in Healthtech and medtech have recorded above-par performances, returning an average of 129.6 per cent since March and nearly 50 per cent since September. Twist Bio science has recorded a particularly standout performance, rising more than 6x from its March lows.

Fintech: Fintech acceptance has reached unparalleled highs since the onset of the pandemic, buoyed in parts by the rising demand for online and mobile services like payments processing, budgeting, lending and trading
platforms. While several new fintechs have emerged, major banks deploying technological upgrades and digitized solutions have further amplified the sector’s appeal.

5G: The 5G era is widely touted as the ‘next big wave’ and the driving force behind global communication once fully deployed. The global 5G services market is estimated to have reached $41.5bn in 2020 and expand at a CAGR of 43.9 per cent between 2021 and 2027. Evidently, investing in 5G stocks is a lucrative strategy. For instance, the Defiance Next Gen Connectivity ETF (comprising a cohort of semiconductor stocks, network equipment manufacturers, and 5G providers) is up by 26.7 per cent in 2020, nearly 2x the 14.4 per cent return for the S&P 500. The recommended 5G stocks have outperformed both the index and the ETF to rise by 105.4 percent in 2020. Cerence recorded a particularly strong performance, rising by 302.2 per cent YTD and nearly 7x from its March lows.

Gaming: The online video and mobile gaming industry has garnered critical mass appeal since the pandemic and is arguably one of 2020’s major trendsetters. The global gaming industry is estimated to have grown
nearly 20 per cent in 2020 and in tandem, the recommended gaming stocks have witnessed extraordinary growth during the pandemic, rising by an average of 62.2 percent YTD, 64.5 per cent since March, and 3.8 per cent since September. NVIDIA has been a standout performer in 2020, rising 127.1 percent YTD, nearly doubling since March.

Cloud computing: The cloud computing domain has gained massive impetus from the burgeoning need for remote and digital solutions globally, which has only been intensifying as the pandemic drags on. IT companies have shown heightened interest to deploy allied services within cloud computing and
big data analytics, across industry verticals. Consequently, the domain has amassed significant investor interest in recent months. The recommended cloud computing stocks rose by an average 100.8 per cent YTD,
with a 17.7 per cent spike since September, dwarfing the returns on each of the Nasdaq Computer Index (4 per cent), S&P 500 Telecom & IT Index (2.6 per cent), and S&P 500 IT Services Industry Index (2.7 per cent) during the same period. The Trade Desk has been the forerunner and has surged 259.2 per cent YTD
and 93.9 per cent since September. In the current environment, investing in the right companies is of utmost importance, and the aforementioned stocks display the credibility and potential that position them as
attractive buys for investors who wish to capitalize on disruptive opportunities.