A new breed of tech stocks is thriving as the world works from home. Here are the key things to look for to make your own 'work from home' tech portfolio.


work from home

  • Wall Street analysts are keeping an eyeing on the shares of companies that are getting a lift from the sudden rise of the remote workforce.
  • The so-called "work from home stocks" covers a broad range of tech players. 
  • They include companies that offer tools that make it easier to communicate, like Microsoft and Slack, access networks, like Citrix, and store and process documents, like Docusign. 
  • Other analysts also focus on the companies running the cloud infrastructures and manufacturers, including the PC makers.
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Tech stocks have been taking a beating on Wall Street, but analysts are keeping an eye on companies that are seeing a demand lift from the sudden shift to a remote workforce.

There's even a name for the brand new category: work-from-home stocks.

"This is a new category of stocks that has emerged from the COVID-19 pandemic," Wedbush analyst Daniel Ives told Business Insider.

The category is still largely undefined and covers a broad range of tech players. They include companies that offer tools that make it easier to communicate, access networks and store and process documents. Other analysts also focus on the companies running the cloud infrastructures that make it possible to run all these devices and tools. Some analysts add tech manufacturers, including the PC giants, to this basket.

Here are the key categories in the emerging field of work-from-home stocks, according to analysts.

Communication and collaboration tools: Microsoft, Slack, Zoom, Docusign, Dropbox

Slack, the enterprise messaging platform, quickly became one of the hottest tools for keeping a remote workforce connected. And that popularity helped it weather the tech selloff.

Slack shares joined the tech plunge as the coronavirus was escalating, but the stock has bounced back and is up about 9% year to date.

Zoom's video conferencing platform also became an even more widely-used tool in the work-from-home era. The company has suffered a setback from security issues, but the stock is one of the rare survivors of the tech collapse. Zoom shares have more than doubled since the beginning of the year.

Microsoft is also getting a lift from its messaging platform, Teams. In fact, Jefferies analyst Brent Thill told clients in a note that "biggest beneficiary of the new work from home environment is Microsoft Teams which has recently seen a large spike in demand." The tech giant recently reported that it now has more than 40 million users.

Microsoft's  stock have regained its losses from the earlier tech plunge and is up fractionally year-to-date.

That's also the case with cloud storage company Dropbox, which has become a valuable tool for storing and sharing files easily. Dropbox's stock has also bounced back and is now up fractionally as well.

Docusign, the virtual signature platform, is becoming a must-have tool in the work-from-home era. And Wall Street knows it: the stock is up 18% since the beginning of the year.


Remote access software: Citrix, VMware

Ives, the Wedbush analyst, describes his work-from-home "Mount Rushmore," consisting of four monumental remote work stocks including Microsoft, Zoom and Docusign.

The fourth is Citrix, which gives employees access to virtual PCs hosted from their network, a valuable tool in the work-from-home era.

Dan Morgan, senior portfolio manager at Synovus Trust Company, is on his list of top stock picks noting that Citrix 's "virtual-desktop technology that makes it possible for employees to access corporate programs when they're offsite." The stock is ahead 30% year-to-date after joining the broader selloff a few weeks ago.

Jefferies analyst Brent Thill also cited VMware as another company giving remote workers access to networks, although its desktop virtualization software business is a relatively small piece of its overall enterprise revenue, he said. The stock has shed 20% year to date, but has rallied in recent weeks.


Laptops and notebooks: Dell, HP, Lenovo

The sudden pivot to a remote workforce gave an unexpected lift to tech companies in what has been a ho-hum market: PCs.

Many companies that imposed a work from home policy quickly encountered a problem: many of their employees didn't have laptops, notebooks and tablets to do their work.

"The three PC horsemen — Dell, Hewlett Packard and Lenovo — will all do well," analyst Patrick Moore had of Moor Insights & Strategy told Business Insider. I'm already seeing indications of that. PC sales are through the roof."

However, Dell and HP shares haven't gotten much of a lift from this trend, mainly because big chunks of their revenue come from the enterprise data center market which is expected to take a hit.

The uptick in PC demand may also be good news for semiconductor companies that make chips for laptops and notebooks, led by Intel and AMD. But Wedbush analyst Matt Bryson said it's unclear if that momentum is sustainable.

"How long a runway is there in terms of that demand?" he told Business Insider. "You don't know how long that's going to last." 


Networking systems: Cisco, F5 Networks

Having reliable and secure networks is key in the work from home era, and this is good news for Cisco and F5 Networks.

Morgan Stanley analyst Meta Marshall told clients in a note last month that the two networking companies are "best positioned" to benefit from the remote workforce trend because of their huge customer bases.

Cisco, which is based in San Jose, is the leading provider of networking hardware and software, including security, used for private data centers and cloud platforms. Seattle-based F5 makes equipment and software used to monitor business networks, to make sure they are working properly and securely.

Marshall cited the example of the financial services industry where companies "have spared no expense on incremental purchases to get a workforce set up for remote working."

Both Cisco and F5 shares are still down about year-to-date but have rallied sharply in the past month.


The giants of the cloud: Amazon, Microsoft and Google

And of course, riding the wave of the work-from-home trend are the tech giants operating the infrastructure that make working from home possible.

"The move to cloud and remote technology is accelerating at a feverish pace," Wedbush analyst Daniel Ives told clients in a note last month.

Amazon, Microsoft and Google are the big three of the cloud, the fast growing trend which lets businesses set up their networks on web-based platforms, allowing them to scale down or even abandon private data centers.

Clearly, the cloud became even more critical when businesses have abandoned even their offices.

Ives sees Amazon and Microsoft, the two biggest cloud platforms, gaining the most in this trend. Google is still a distant third and it's unclear how much of a lift it could get, he said.

This view is evident on Wall Street where Amazon and Microsoft share have both rallied from the recent tech plunge and are now back in the green for the year. Google shares are still off more than 10% year to date.



Tags: Google, Amazon, Microsoft, Wall Street, Trends, Cisco, Intel, Dropbox, San Jose, Dell, Amd, Seattle, Lenovo, Jefferies, Vmware, Marshall, Citrix, Wedbush, Ives, Moor Insights Strategy, Amazon Microsoft, Daniel Ives, Dan Morgan, Synovus Trust Company, Patrick Moore, Matt Bryson, Brent Thill, Meta Marshall, Dell Hewlett Packard, Networks Morgan Stanley

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