We need to be more careful than ever when buying stocks since valuations on stocks are very high, despite the recession. The best place to look for stocks are in industries that have been adversely affected by the recession.
The first stock which I'm buying in June 2020 is Alaska Air Group $ALK . Alaska Airlines is the fifth largest airline in America. I'm already profitable by 50% on the shares that I bought in March but I still believe that the stock of Alaska Airlines are cheap. Now is a good time to invest in airlines since everybody is bearing on airlines. But 10 years from now, people will be flying and now is the time to buy. Alaska Airlines have the advantage that most of their flights are domestic and they will return to normal faster than the competitors. Alaska Airlines also has a great management and has been rated the best airline in America multiple years in a row.
Alaska Airlines got a bailout from the US government but they will only need to dilute the shares by 0.6% and why they are able to do that, it is because they have a great balance sheet. Instead of buying back shares like the other airlines in the past years, they acquired Virgin America and then bought marketable securities. Today, they have enough cash to repay their debts.
The second stock which I'm buying is a copper miner, Freeport-McMoran $FCX . Because of this recession, copper prices have been falling as demand falls. But the demand for copper will be increasing in the coming years with the rise of electric vehicles, renewable energies, electrification and construction in the developing world. There will most probably be a supply gap on copper in the coming years and that's why it is a good time to invest in copper.
FreePort-McMoRan is not really a good company but it is very sensitive to copper prices since it has high operating costs. It we have higher copper prices in the coming years, FreePort-McMoRan will do great.
The third stock which I'm buying in June 2020 is not actually a stock but an ETF, the Brazil ETF, EWZ ETF $EWZ . Brazil is an emerging economy but the growth won't be as big as in China or India. Since last year, Brazil has a new president, Jair Bolsonaro and he is promarkets. Brazil has one of the highest corporate tax rates in the world. The new president wants to lower these corporate taxes. This will be good for the Brazilian stock market. Brazil also has more room for monetary policies than many other countries without affecting the strength of their currency since they are a net exporter.
The largest company on the EWZ is Vale, one of the largest Iron Ore producer in the world. Other big companies in the ETF are some of the largest Brazilian banks and the oil company, Petrobras. Why not buy individual stocks? I'm betting on Brazil. I believe that the returns of this ETF will exceed that of the S&P 500 in the coming years. Later, if I think that I need a particular company, I'll look for one.
Watch the full video on YouTube:
https://www.youtube.com/watch?v=4A18N-ahqLI&list=UUPO3uUyoXSaFWG-Ldq1mqEQ
Here's my full analysis of the Brazilian markets:
https://ishfaaqpeerally.teachable.com/courses/662813/lectures/17365430
Join my private investing group on Facebook for more:
https://www.facebook.com/groups/IshfaaqInvesting/
Comments