Shopping mall stocks are set to surge in 2021 as a Covid vaccine sees life return to normal.
During the big lockdowns of last year, Westfields across Australia were deserted apart from panic-buying crowds at Coles, Woolworths, Aldi and the local chemist.
The shutdowns also decimated the advertising market, jeopardising the revenue of media companies and stirring fears about their future.
The acceleration of technological change prompted many to predict the end of the traditional shopping mall as a deadly pandemic caused a consumer revolution that made almost everyone shop online.
But with many investors looking to the future, shopping malls, streaming services, property sales websites and even a rare earths miner are set to sizzle in 2021.
Shopping mall stocks are set to surge in 2021 as a Covid vaccine sees life return to normal. Fat Prophets is recommending Scentre Group, the owner of Westfield. Pictured is the Bondi Junction mall in Sydney’s east
Shopping malls
Despite that prediction shares in Scentre Group, the owner of Westfield, have more than doubled from $1.43 to $2.92.
Greg Smith, the head of research with share market advisory group Fat Prophets, said the Covid vaccine was set to revive shopping malls – and make share investing a good option as Australians hankered for a traditional consumer experience.
‘The death of the mall is probably greatly exaggerated,’ he told Daily Mail Australia.
‘A lot of the shopping centre stocks are trading at pretty discounted valuations still.’
Property sales
The biggest monthly surge in Australian house prices since August 2003 is also making property sales companies a good buy.
Domain Holdings shares have surged from $1.72 in late March to $4.76 as of Tuesday while REA Group have also more than doubled from $65 to $162 in early February, before slipping to $144 this week.
‘The property market’s been going up so you’ve got that wealth effect,’ Mr Smith said.
CoreLogic data unveiled on Monday showed a 3 per cent surge in Sydney’s median house price as capital city and regional prices climbed by 2.1 per cent.
The biggest monthly surge in Australian house prices since August 2003 is also making property sales companies a good buy. Pictured is a Brisbane auction in 2020
The REA Group, the company behind realestate.com.au, revealed on Tuesday that Australian house prices had soared by 6.9 per cent during the past year, more than triple the 2.1 per cent pace of units, despite the Covid recession.
In February, monthly capital city prices outpaced regional areas for only the second time in a year.
The REA Group’s director of economic research Cameron Kusher said record property search activity was now ‘flowing through to pricing’.
‘Rising consumer confidence in Australia on the back of open interstate borders and the rollout of a COVID-19 vaccine has buoyed the market,’ he said.
Media
With many people trapped at home last year, Nine Entertainment did well as subscribers flocked to its streaming service Stan.
Nine’s share price has more than tripled from 84 cents in March 2020 to $3 as of Tuesday as the advertising market recovered faster than anticipated.
‘Nine’s digital assets are doing very well and all this is helped by the fact that the advertising market has also turned around,’ Mr Smith said.
‘A lot like the Australian economy, quicker than many thought.’
The Nine media conglomerate, which also owns newspapers including The Sydney Morning Herald and The Age, this week revealed that its half-year net profit in the six months to December 2020 had surges by 72.6 per cent to $186.9million.
Mr Smith said the surging popularity of Stan – the home of the RuPaul’s Drag Race, Bump starring Claudia Karvan and the upcoming Australian-filmed thriller Gold starring Zac Efron – would make Nine a good buy in 2021.
‘Streaming services are already doing pretty well during Covid – it had a huge jump last year,’ he said.
‘They’ve got some great content.’
With many people trapped at home last year, Nine Entertainment did well as subscribers flocked to its streaming service Stan. Pictured is the streaming show Bump
Buy now, pay later
Buy now, pay later app Afterpay has been the big star during the past year, with its share price multiplying 18 times from $8.80 in March last year, after the share market plunge, to $158.47 on February 10 this year.
Smaller competitors have also excited investors, with ZipCo’s share price rising from $1.23 in March last year to $13.92 in mid-February as Sezzle surged from just 44 cents a year ago to $11.63 last month.
Despite that, the buy now, pay later tech alternatives to credit cards are yet to make a profit and potentially face competition from the big banks should they develop their new apps with interest-free options.
‘Overall, the sector’s pretty frothy,’ Mr Smith said.
‘On a simple valuation basis, there’s a lot to live up to there.
‘There’s a tremendous amount of growth priced in for companies that are not profitable and will they all be winners?’
Buy now, pay later app Afterpay has been the big star during the past year, with its share price multiplying 18 times from $8.80 in March last year, after the share market plunge, to $158.47 on February 10 this year
Biotech
In another surprise the $271 share price of CSL, Australia’s biggest listed company in 2020, is roughly where it was a year ago, even though it will be manufacturing the AstraZeneca vaccine in Australia.
Biotech companies are failing to excite the market as pharmaceuticals traditionally make their revenue from prescription drugs that need to be repeatedly used instead of vaccines.
Rare earths
Instead, share investors are looking to the future – focusing on electric cars and computer technology.
Lynas, the world’s second larger producer of separated rare earths, has during the past year seen its share price surge from $1.07 to $6.38.
Lynas, the world’s second larger producer of separated rare earths, has during the past year seen its share price surge from $1.07 to $6.38. It mines neodymium and praseodymium, which are used to make magnets for electric vehicles like the Tesla
Mr Smith said the accelerated production of fully-electric vehicles in 2021 meant there would be more demand for neodymium and praseodymium – the key minerals mined by Lynas.
These elements, used by the likes of Tesla to make magnets for electric vehicles, are also used in computing.
‘Rare earths are also used in a wide range of everyday goods, including iPhones and hard disc drives in laptops,’ Mr Smith said.