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.

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

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. 

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Fevertree Drinks. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

many happy international football fans watching tv
Investing Articles

Is this FTSE 250 stock gearing up to more than double its market cap by October?

Our writer considers the implications of a recent stock market announcement for the share price of this FTSE 250 retailer.…

Read more »

Inflation in newspapers
Investing Articles

3 overlooked UK shares growing dividends faster than inflation

Mark Hartley highlights three lesser-known UK shares offering inflation-beating dividends, while noting key risks investors should watch.

Read more »

Belfast City Sunset with colorful twilight over Lagan Weir Pedestrian and Cycle Bridge spanning over the Lagan River in downtown Belfast
Investing Articles

My 3 ‘secret’ rules I always follow when hunting passive income stocks

Mark Hartley reveals three perhaps not-so-secret tips he uses to ensure his passive income strategy doesn't come back to bite…

Read more »

Man riding the bus alone
Investing Articles

Is there a good reason to consider Greggs shares?

Greggs' shares have been in a state of decline over the past 12 months. However, Dr James Fox remains concerned…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

What’s going on with the Jet2 share price now?

The Jet2 share price pulled back after its preliminary results were released on Wednesday. Dr James Fox explains why this…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Is ‘SIMAGA’ the secret to avoiding stock market crashes?

Is there any way for investors to avoid stock market crashes? This method worked for centuries, but is now breaking…

Read more »

Middle-aged black male working at home desk
Investing Articles

Here’s a cheap FTSE 100 share to consider buying today and holding for 10 years!

Driven by a new commodities supercycle, I'm expecting this FTSE 100 mining stock's shares to take off between now and…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

£10,000 invested in Palantir stock 5 years ago is now worth…

Palantir stock's exceeded the expectations of probably the most bullish analysts. But Dr James Fox isn’t convinced by the current…

Read more »