Finally a green day for the markets as Central Banks all around the world are considering injecting money into the system. Is that something to celebrate about? I don't really think keeping the markets up artificially is a good idea. This is a discussion for another day. In our portfolio, everything is green today apart from the $OIL stocks even if oil prices rose a little over the weekend. I don't think that the fear about the coronavirus is over. Even if central banks inject money in the system. This will not affect oil prices in the short term but in the long-term if there will be higher inflation, then oil prices will definitely rise.
3 Stocks I'm Buying in MARCH 2020
1. GameStop $GME
GameStop lost 40% of its market value since the beginning of the year and the company will most probably go bankrupt in the coming years. Then why I'm investing in GameStop? I'm buying GameStop because of the new console cycle. Sony and Microsoft will launch their new consoles, the Playstation and the Xbox respectively, in November. The sales and stock price of GameStop are cyclical. Each time there are new consoles, the stock price will go up. Even if GameStop is not going to sell that many consoles because of competition from Amazon, Best Buy and Walmart, it will be enough for the stock price to skyrocket and that's because of the technicals. There is the possibility of a short squeeze happening with GameStop. 96% of the shares are being shorted while the company is buying back its own shares.
Even if we ignore the short squeeze, GameStop has great fundamentals. The market cap is lower than the amount of cash they have. They are trading under book value. GameStop has a great balance sheet and is not the next Blockbuster. It is a cigar butt stock.
2. Qudian $QD
This is a new addition to my portfolio. Qudian is a Chinese fintech company engaged in peer to peer microlending. The stock has a PE ratio of 1.3. There are 225 million adults without a bank account in China and Qudian gives these people access to credit. Wall Street doesn't like Qudian so much because it is changing a lot and also because the management didn't really give the right numbers on the delinquency rate. Wall Street was angry with Apple $AAPL when they decided not to give their iPhone sales number anymore. Even if the delinquency rate increases, even if the profit margins go down, the Qudian business is going to grow and at such a price, it is a real bargain.
3. Fitbit $FIT
This is an arbitrage trade. Google is going to buy Fitbit for $2.1 billion or $7.35 in cash. Right now the stock price is about $6.30, so if you invest in Fitbit you can be sure to make 15% profits once the deal is done. The risk is if the deal doesn't go through but I don't think that this will be the case as Google buying Fitbit will bring more competition to Apple's quasimonopoly on the smartwatch business. Arbitrage trades bring stability to your portfolio. The market lost 12% last week while Fitbit lost only 0.9%.
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