By Dáire Ferguson, CEO at AvaTrade

Since the onset of the Covid-19 pandemic nearly two years ago, financial markets have experienced levels of volatility which are at near unprecedented levels. Rising inflation, increased interest rates and further disruption to the supply chain fuelled this stock market volatility. As such, it’s worth taking a deep dive into specific industries, to see which delivered strong performances in 2021, and which failed to live up to expectations.

Energy companies performed well

A number of factors resulted in energy companies delivering a strong showing in 2021. Firstly, extreme weather events caused the price of oil and gas to increase. For example, in August and September of last year, Hurricane Ida significantly disrupted oil and gas operations in the Gulf of Mexico which caused the prices of these two natural resources to soar. Secondly, as soon as economies around the world started to reopen following the lifting of Covid-19 restrictions and lockdowns, oil and gas were once again in high demand. This is because countries needed commodities for various industries, including manufacturing and travel. Finally, developing nations like Brazil, China and India require more energy each and every year. As the demand for these natural resources increases, the amount available decreases, resulting in the price of the commodities rising. The increased demand and lack of oil and gas supply resulted in energy stocks performing extremely well in 2021, with a number of companies operating in this sector, such as Devon Energy, Marathon Oil and Diamondback Energy all exceeding 100% in terms of their return in 2021.

Poor year for work from home stocks

2021 was not a good year for work from home stocks. As lockdowns in countries around the world came to an end, organisations re-opened their doors to members of staff for the first time in over a year. This meant that there was a reduction in dependence on work from home tools, such as Microsoft Teams and Zoom. For example, Zoom’s return for 2021 was -41.31%. What’s more, investors also chose to put their money into re-opening stocks, which came at the expense of investing in work from home shares. Furthermore, with facilities like leisure centres and gyms welcoming people back, individuals had less of a desire or needs to have exercise machines or equipment in their homes. As a result of this, the exercise equipment provider Peloton saw its return fall by an astonishing 74.49%.

Strong showing from pharmaceutical stocks

Pharmaceutical organisations performed very well in 2021, as was also the case in 2020. With the Covid-19 pandemic still raging, pharmaceutical stocks continued their upward trajectory. For example, 2021 was a good year for West Pharmaceutical Services, which helps to deliver Covid-19 vaccines in a safe and secure manner by using containers, with the firm producing a return of 54.96%. For those companies’ producing vaccines for Covid-19, 2021 was an even better year than 2020. This can be attributed to the mass distribution of the vaccines. An example of this can be seen with Pfizer, who’s return for 2021 was 65.77%, while Moderna’s was a staggering 164.55%. Although growth wasn’t just limited to those firms’ producing vaccines, these companies delivered a particularly strong showing last year.

Travel stocks took a hit

Travel restrictions being in place throughout most of 2021 meant that like 2020, last year represented a disappointing one for travel firms. These restrictions hit the industry hard, significantly limiting the locations people were able to travel to. What’s more, travelling from one country to another necessitated both costly and frequent testing, deterring people from heading abroad. This saw the share prices of travel companies take a hit. Resort developers and operators such as Wynn Resorts (-28.4% return) and Las Vegas Sands (-42.70% return) suffered, as too did air travel firms like Southwest Airlines (-15.55% return). The cruising industry was also heavily affected by travel restrictions, as some countries enforced measures preventing ships from certain locations docking at their ports. The returns for both Carnival and Norwegian, two international cruises lines, were poor, standing at -12.74% and -18.44% respectively. Although the travel industry has started to show signs of recovery, the spread of variants, like the Omicron variant which led to some countries reimplementing travel restrictions, may destabilise the travel industry once more.

Cybersecurity stocks delivered significant growth

As Covid-19 continued to have a major impact on the world in 2021, many organisations experienced challenges with their hybrid working structures. This was particularly prevalent in the area of cybersecurity, as members of staff required protection, irrespective of if they were working from the office or at home. Businesses implemented measures and installed systems in an attempt to make sure their increasingly distributed operations were both safe and secure, so as to protect them in the event they were on the receiving end of a cyberattack. Moreover, a number of noteworthy cyberattacks took place last year, namely the cyberattack on Australia’s Channel Nine TV network and hackers targeting a water supply system in Florida. Attacks like these emphasised to companies across all industries the need for an effective security system. As a result of this, firms in the cybersecurity sector delivered strong returns in 2021. Palo Alto Networks, an enterprise cybersecurity platform, delivered a return of 50%, while Fortinet, a provider of cybersecurity hardware, had a return of over 120%. As such, 2021 was a good year for cybersecurity firms.

*Figures are accurate as of end of 2021

**All of these stocks are available to trade on AvaTrade