The image shows a man on his laptop, while one child hangs on his back and another child sits beside him closely

The past several months have shaken up numerous aspects of our daily lives. For many, one of the most notable changes is the shift from working elsewhere to working from  home. Commutes are non-existent, Zoom is the new conference room, and water cooler chats now take place exclusively on G-Chat or Slack.

After Google announced in late July that its employees would not be required to return to the office until summer 2021, many companies have followed suit. Now, what began as a quick pivot by businesses to stave off the coronavirus, work-from-home is becoming a long-term (or even permanent) fixture for employees across the country.

But what does this changing work environment mean for the stock market? As we adjust to a new, hybrid working model and businesses begin to re-open around the country, some stocks continue to thrive. Others, that faltered early in the pandemic, may be showing signs of life as hope for a vaccine drives consumer health. How can investors make the most of this time in the market? While it may be too late to capitalize on certain stocks, opportunities do still exist.

1. Stocks at the top could be out-of-reach.

When you think of the companies that have prospered due to the shift of working, attending school, and socializing from home, Zoom is likely to be one of the first that comes to mind. The video conferencing stock has skyrocketed this year, rising more than 500% YTD. Investors who got in early are in luck — but at this point, it can be difficult to buy a stock that’s seen such fast and high growth.

Even though Zoom’s second quarter results were significantly better than projected and its outlook increased, so has pressure for the company to continue reporting growth at recent rates. Not to mention, this rise makes it hard to determine what the stock is worth based on the company’s profitability. When expectations rise so quickly, investors face increased risk to the downside.

2. Look for stocks with room to grow.

Many industries, from video conferencing (like Zoom) to online retail — for example, the cloud-based e-commerce platform Shopify, whose stock has risen more than 220% in the past year — have already significantly benefited from this life-at-home landscape. But because it’s lasting longer than anticipated, certain stocks, sectors, and industries may still have room to continue performing well. Specifically those that haven’t quite reached stratospheric levels and whose valuations are still relatively acceptable.

Some examples of this include PC makers and software as a service (SaaS) companies. Think: cloud-based technology companies that provide corporations with services like e-signatures, editing, communication, e-mail, CRM, and more.

3. Extended time at home boosts home improvement companies.

The number of home improvement projects people are taking on this year has skyrocketed — a trend that’s not necessarily slowing anytime soon. More than 70% of Americans have already done some home improvement work during the coronavirus, and even more so plan to take on a project going into the next year.

As families spend thousands of dollars renovating, repairing, and upgrading their homes, it may be worth it for investors to look into those companies that supply these projects. Lowe’s and Home Depot have seen growth in their stock prices this year, up 33% and 25% YTD, respectively, and are two of the five largest consumer discretionary stocks. Investors may also want to look at paint manufacturers, cabinet or furniture hardware makers, and other producers of items necessary for home improvement work.

4. Certain behavioral changes are here to stay.

Even once we return to a “normal” working environment, many behavioral trends that have emerged during the pandemic are unlikely to reverse. One of the most significant:  the increased use of technology in our daily lives, from working to shopping to communicating. Both consumers and businesses are adopting new technologies at a much faster pace than what is typically expected.

As people become accustomed to doing more online and appreciate the benefits, businesses that provide seamless digital experiences — with added services such as buy online and pick up in store, as well as electronic payment methods — will continue to be preferred by consumers.

5. Our furry friends have impacted the market, too.

The trends in tech and home improvement come as little surprise in a world where our homes double as offices. But without our colleagues a desk away, people are looking to pets to provide companionship during the long hours at home. Pet care is one area that has done well during COVID-19 and will likely continue to prosper for months to come. Chewy, for example, is expected to report about 40% revenue growth in its third quarter earnings report — driving optimism for the online seller of pet products.

Many people adopted or brought pets into their homes during the pandemic, and the trend to take better care of animals is unlikely to slow down even when employees return to their human coworkers. This will continue to benefit pet food, retail, and health care companies — potentially creating a space where investors can benefit.

A return to the office may be far off for many companies around the country, as uncertainty extends the WFH model longer than anticipated. But for investors, opportunities that emerged early in the pandemic, due to this changing environment, may still exist if you know where to look — which starts by identifying stocks with room to grow and avoiding the ones that may have already skyrocketed beyond their worth.

The opinions expressed here are not meant to be used as investing advice. For more information, visit our website.

Speech bubble icon next to text "Expert Take"

Headshot of Lindsey BellLindsey Bell is Ally’s Chief Investment Strategist, responsible for shaping the company’s point of view on investing and the global markets. She is also President of Ally Invest Advisors, responsible for its robo advisory offerings. Lindsey has a broad background in finance, with experience on the buy-side and sell-side, in research and in investment banking and has held roles at JPMorgan, Deutsche Bank, Jefferies, and CFRA Research.

Lindsey holds a passion for teaching individuals how to become successful long-term investors. She is a contributor at CNBC, and frequently shares her insights with various publications including the Wall Street Journal, Barron’s, MarketWatch, BusinessInsider, etc. She also serves on the board of Better Investing, a non-profit organization focused on investment education.