I admit to being a little spoiled.
I’ve worked primarily from home for nine years now. After spending nearly 15 years on Wall Street “trading desks” – which were like loud, raucous skyboxes overlooking all the action – I was ready for a change.
Technology made that possible. And I now work in a spacious and quiet room with chill music playing in the background. Oh, and two dozing dogs that add snoring sounds to the otherwise calm atmosphere.
Not only do I like it better, but I work better. This quiet, more-focused setup helps me think creatively and analyze data – and tune out the noise that plays out on trading desks, TV, and across the internet.
When COVID-19 erupted into a global pandemic – can you believe it’s coming up on four years ago? – working from home became the rule rather than the exception.
Shares of companies who helped make that possible, like Zoom Video Communications (ZM), went on insane tears. The stock soared more than 700% in just 10 months, from $68 to start the year to $570 by late October.
Maybe you’d rather forget – I wouldn’t blame you – but the pandemic changed the way we work and how many businesses operate. When the lockdown didn’t end after two weeks – wishful thinking – employers and businesses everywhere had to quickly adapt to survive.
“At home” anything stocks soared accordingly, like Zoom, Netflix (NFLX), and Domino’s Pizza (DPZ). Who didn’t need some comfort food?
But now look at the last three years. ZM is all the way back to where it started at $60.
Now that the pandemic has settled – fingers crossed – some big-name companies are battling to get employees back in the office.
Amazon (AMZN), which also boomed during the pandemic, announced earlier this year that employees needed to work in the office at least three days each week. Last month, the company told managers they could fire employees not meeting those requirements.
Alphabet (GOOGL), Apple (AAPL), and Zoom are other companies leading the fight. Yes, even Zoom, the very company that enabled so much of the necessary communication from home.
If even Zoom is having some of its employees come back to the office, we have to wonder if Covid was the peak of telecommuting. It would certainly make sense if it was.
We also have to wonder if Covid was the peak for some of these stocks that shot to the moon when the world was shutdown. Let’s run a few of them through our Quantum Edge system and see.
Quantitative Ratings on 3 At-Home Stocks that Soared Higher
Zoom Video Communications (ZM) is the poster child for remote work and online communications. That surge in 2020 was spectacular, but the 87.5% drop the last three years is about as harsh as it gets.
Unfortunately for shareholders, my system gives it a Quantum score of 44.8, which doesn’t offer a whole lot of hope for significantly higher prices.
The technical rating is very low at 29.4, which is not surprising given that three-year plummet along with this year’s 10% slide. Fundamentally, the stock scores much better at 66.7, but neither earnings nor sales are growing very much, if at all.
Barring some other historic global event, it’s hard to see shares getting back to their peak anytime soon, if ever.
Netflix (NFLX), on the other hand, looks much more appealing. Yes, shares are still almost 40% off their 2020 highs, but with a Quantum Score of 77.6, NFLX is in the optimum buy zone.
The technicals are very strong at 82.4, thanks to this year’s nearly 50% run – including an impressive 24% post-earnings pop over the last three weeks.
And speaking of earnings, the fundamentals rate a solid 70.9, with strong earnings growth, acceptable sales growth, and good profit margins.
NFLX looks well positioned to move higher, especially in a stronger market.
Domino’s Pizza (DPZ), on the other hand, has a tougher road ahead of it. Shares peaked in late 2021 near $560 per share, and nearly two years later they’ve essentially been cut in half.
With a roughly 10% gain in 2023, they have underperformed the S&P 500. And with a respectable but not elite Quantum Score of 58.6, future upside is a bit of a question mark. The 67.7 technical rating is pretty good, helped by the November bounce enjoyed by many stocks.
But the Fundamental Score at 45.8 leaves little to be desired. Single-digit sales and earnings growth aren’t enough fuel for a rocket shot higher. And while the stock is 96.4% owned by institutions, my system detected many more Big Money sell signals (red bars) than buys (green) the last two years.
Knowing Where to Look
A tragic once-in-a-century pandemic accelerated at rapid speed the technologies and businesses that made working from home and having everything delivered to your door possible.
It may have also represented the peak of remote work and deliveries, but we know they are here to stay in some measure.
Some of the early investment opportunities don’t enjoy the same potential they once did, but there are still related opportunities out there. For example, the top-rated tech stock in my Quantum Edge system right now is a leader in cloud networking solutions. Efficient and fast networking will only grow more critical as artificial intelligence software sweeps the Earth and soon-to-come quantum computers supercharge A.I.’s capabilities.
The trends continue to evolve, and the best investments remain those with elite fundamentals, strong technicals, and plenty of Big Money flowing in.
Editor, Jason Bodner’s Power Trends