‘Zoom’ into COVID-19 opportunities

Albert Einstein said: “In the midst of every crisis, lies great opportunity.” Investor’s Digest associate editor Manal Ali went looking for some stocks that may prove him right.


Albert Einstein would have known to look for opportunity in the Investor’s Digest of Canada.

As the coronavirus pandemic continues, schools will likely remain shut for an indefinite period, giving parents, educators and officials due cause for concern about how to teach millions of children. Enter online education.

A report from UNESCO, the UN organization responsible for education, science and culture, predicts that the coronavirus pandemic will impact the education of more than 290 million students across 13 countries. Accordingly, it seems only prudent to watch out for online education providers that are poised to grow.

Some companies of note include:

Zoom Video Communications Inc. (ZM-NASDAQ): For those who had not heard of it already, this company has recently become a household name because of its widely-used video conferencing services. Zoom’s versatility applies to not just education but the workplace as well and has even been used by many churches and mosques.

New Oriental Education & Technology Group Inc. (EDU-NYSE): New Oriental offers online education programs that include college, K-12, and pre-school education. The company’s expected earnings growth rate for the current quarter is 13 per cent.

Chegg Inc. (CHGG-NYSE): Chegg operates a direct-to-student learning platform. It also allows students to find human help on its learning platform through a network of live tutors.

Arco Platform Ltd. (ARCE-NASDAQ): Arco Platform is a Zacks Rank No. 1 (“strong buy”) company that provides a pedagogical system with technology-enabled features to deliver educational content to private schools, students, teachers, administrators, and parents.

An important consideration for schools relying on the Internet to a greater degree is the higher chance of school hacks and other cyberattacks. Even the World Health Organization has had to defend itself against a rising number of cyberattacks.

Schools are responsible for even more valuable data on students and employees. More businesses are setting up virtual private networks, too.

The coronavirus pandemic could exacerbate the damage hackers do if their schemes play on people’s fears. IT departments are also much busier dealing with technology issues caused by working from home during the transition, which could divert their resources away from looking at cybersecurity more carefully.

According to Forbes magazine, in 2004 the global cybersecurity market was worth a mere US$3.5 billion and grew nearly 35-fold to US$120 billion by 2017. As of 2018, there were up to 200 vendors competing in each layer of cybersecurity. According to Cybersecurity Ventures, global spending on cybersecurity will exceed US$1 trillion cumulatively over the five year period of 2017 to 2021.

Some notable cybersecurity firms you may want to follow are:

CrowdStrike Holdings Inc. (CRWD-NASDAQ): CrowdStrike is a newcomer in the field. The company uses machine learning to detect malware on laptops, mobile phones and other devices that access corporate networks.

Furthermore, CrowdStrike’s initial public offering in June 2019 raised US$612 million, one of the largest cybersecurity offerings.

Okta Inc. (OKTA-NASDAQ): Okta is another cybersecurity company that offers its own slate of cybersecurity products more focused on user authentication.

Co-founder Frederic Kerrest argues that while COVID-19 is the event pushing employees to work from home in the short run, the overall need to bolster security on remotely-accessible networks remotely won’t go away after things return to normal.

Microsoft Corp. (MSFT-NASDAQ): Microsoft is integrating more security tools into its cloud-based Office 365 software.

Manal Ali is associate editor of Investor’s Digest of Canada.

This is an edited version of an article that was originally published for subscribers in the April 24, 2020, issue of Investor’s Digest of Canada. You can profit from the award-winning advice subscribers receive regularly in Investor’s Digest of Canada.

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