My 3 best investment ideas from January 2020 and what I’d do about them now

Some of these stock investment ideas would have reaped good returns, but others would be best avoided.

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The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

To know where we are going, it’s often instructive to look at where we are coming from. And this applies to investments as well. In this spirit, I took a look back at the stock ideas I had this month one year ago. Here are three of my best:

#1. Fevertree Drinks: US market gains

AIM-listed Fevertree Drinks (LSE: FEVR) was one stock I was gung-ho about. At the time the tonic-water manufacturer’s share price had crashed by a resounding 27% following a weak trading update. 

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My big argument in its support was based on its healthy growth in geographies outside of the UK. This trend was visible even up to June 2020. It reported declining sales in the UK and Europe but a huge 39% increase in its US sales.

That said, its total revenue has been impacted, as has been its earnings. But at a time of high investor confidence, money is getting funneled into stocks even if they are weak. They just need to show potential. 

It’s no coincidence then, that from the date the article was published to now, the FEVR share price has risen over 60%. I’d be a bit more cautious to buy it today, however, going by the continued lockdown and its high earnings ratio of 56 times.

#2. Anglo American: metal price boom 

The FTSE 100 miner Anglo American (LSE: AAL) was another stock I liked year ago. It had just bid for the beleaguered Sirius Minerals, which was subsequently de-listed. At the time of writing the article I saw its Sirius Minerals bid as a strategic one towards cleaner energy.

One-fourth of AAL’s revenues are derived from coal at present. Acquisition of the polyhalite miner would, in that context, be a step in the right direction. While 2020 hasn’t been one of much progress in strategic goals, investors are clearly bullish on the stock. 

Industrial metals’ price boom has been a boon for miners. As a result, AAL’s share price has seen a 28% increase since even the pre-crash levels of January 2020. It’s at multi-year highs now. But I think it’s still a good buy because metal demand can increase further on US and Chinese infrastructure spends.

#3. Tullow oil: sinking stock

While these are two examples of stocks that would’ve earned me good returns, there’s one which wouldn’t (and I’m glad I didn’t buy it). As much as buying winning stocks, ensuring robust gains also means letting go of what may look like good opportunities at the time but are quite risky. 

I’m referring to the FTSE 250 oil and gas producer Tullow Oil, whose share price had fallen 16% at the time of writing last year. It was in a challenging place even then, and after the 40% in its share price since the time I wrote about it. It continues to be weak, making it a good idea for me to steer clear from the share for now.

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