The Shine Is Coming Off the Boom Stocks of 2020
The third quarter may mark the turning point for companies that benefited most from pandemic tailwinds.
The pandemic buying spree is past its peak.
Photographer: Josh Edelson/AFP
As investors think about which stocks to hold going into 2021, there may be no bigger red flag than a huge third-quarter earnings beat. That's because of what the pandemic has done to consumer behaviors and corporate earnings this year — impacts that may turn out to be more transitory than real-time-obsessed investors may anticipate.
We're already seeing the shine coming off the stocks of some of the early pandemic winners, an impact that may broaden as people turn their attention to next year's business prospects. Two companies where this "pandemic boom followed by bust" arc has played out are Netflix Inc. and Kimberly-Clark Corp. During the most intense phase of the pandemic in March and April, video streaming services and toilet paper were the ultimate shelter-at-home amenities.