BUSINESS TYPES LIKELY TO OUTPERFORM

In a general sense, it is predicted that if unemployment were to rise substantially, that this will increase demand for smaller “buy a job” businesses of various types.

Beyond this part of the market, examples of businesses that will be likely to sell well in the marketplace include:

  • Financial services (e.g. accounting, insurance and financial planning).
  • Non-discretionary retail (e.g. supermarkets, liquorstore).
  • Non-discretionary manufacturing/wholesale (e.g. essential foods, cleaning products).
  • Essential services (e.g. medical, aged care, education, security, energy/ power generation). s V a l u e s
  • Maintenance businesses – as consumers/businesses look to repair cars, plant and equipment etc rather than make large new capital purchases.
  • Growing industries (e.g. online retail/wholesale, technology businesses, mining services, environmental/solar businesses).

Local manufacturing may see an upside as it becomes more difficult to import products from overseas and customers become wary of relying on overseas supply chains.

BUSINESS TYPES LIKELY TO HOLD STEADY OR HAVE ONLY MODERATE DOWNSIDE

  • Domestic accommodation/ tourist businesses – given that Australia in recent years has had more outbound tourists than inbound, if more Australians decide to holiday locally this sector will likely benefit.
  • Lower priced restaurants/takeaway foods as they are not high discretionary spend items.
  • 3rd party logistics and outsourcing businesses – as businesses look to gain efficiencies/ offset the risk of having internal staff and investing capital.
  • Some businesses that have demonstrated reasonable trading during the Coronavirus lockdown, will get an extra tick given this sign of resilience.

BUSINESS TYPES LIKELY TO UNDERPERFORM/FALL IN PRICE

  • Higher priced discretionary retail businesses (e.g. new car and boat sales yards, travel agencies (international focussed), high end jewellery and clothing shops).
  • Upmarket restaurants/eating houses.
  • Discretionary service businesses (e.g. limousines, high end beauty).
  • Wholesalers/manufacturers of discretionary goods (e.g. upmarket furniture, art).
  • Non- Essential Consultants – government and private businesses tend to minimise use of external consultants during recessions.