Third-quarter earnings reports are coming in the following weeks — and investors will be focused on…

The big thing to watch for: Negative impacts of supply chain issues and labor shortages on sales and costs.

• Apple was forced to cut iPhone 13 production due to chip shortages — along with nearly every other retailer.
• When companies report earnings this quarter, we’re about to see the damage from these problems firsthand.

Of the few companies that already reported earnings, a large majority have mentioned the negative impacts of supply chain issues.

The resilient ones: Bank of America’s equity strategy suggests looking at companies with pricing power — the ability to increase prices without impacting demand.

Software companies, which sell digital products, have pricing power and are resilient to supply chain issues and labor shortages:

• Labor shortages have mainly impacted service (i.e hotel, restaurants) and retail industries.
• Higher shipping costs/inventory shortages are impacting companies that sell manufactured products.

Be more specific: Software businesses that sell their products to businesses (instead of consumers) are more resilient. Unlike consumers, who can cancel subscriptions easily, businesses tend to rely on software to power their operations.

In the past, we wrote about the cloud companies providing digital tools powering digital communication (Twilio — NASDAQ:TWLO), cybersecurity (Crowdstrike — NASDAQ:CRWD) and marketing & sales (Hubspot — NASDAQ:HUBS). The cloud starter pack is a good place to begin.

And also: Third-party marketplaces facilitating sales between users that handle their own shipping could benefit.