In February 2020, global stock markets crashed as the world faced the first global pandemic in a century.
With the benefit of hindsight, we know that the FTSE 100 bottomed out on 20 March, just a month later. So it was a short-lived market crash, and the Footsie has rebounded nearly 50% since.
Of course, none of us knew at the time how long the pandemic would last or what long-term affects it would have on companies. Warren Buffett was spot on when he said: “In the business world, the rearview mirror is always clearer than the windshield“.
Nevertheless, I find it interesting to consider which blue-chip stocks would have at least doubled my money had I fortuitously timed the bottom of the market. Here are three that stand out.
Mining
First up are Glencore (LSE: GLEN) and Antofagasta (LSE: ANTO). The two mining stocks have risen 297% and 137% since their March 2020 lows. And that’s not even including the regular cash dividends that they’ve paid along the way!
The sell-off in mining shares during the pandemic crash was due to the anticipated collapse in demand for commodities. However, investors who took the long view then would be sitting pretty today.
I did recently invest in Glencore stock, though my timing has been off, with my holding down 10% so far. This demonstrates the cyclicality of mining stocks, and therefore the risks.
Still, I’m bullish on Glencore, especially if it divests its increasingly controversial thermal coal business. Its expertise in large-scale copper production stands it in good stead during the energy transition. Without copper, there will be no net-zero reached.
However, unlike Glencore, which has a presence across six continents, Antofagasta operates almost exclusively in Chile. And that now brings country risk, as the Chilean government is currently seeking to nationalise parts of the mining sector.
So, while I wish I’d bought Antofagasta stock and doubled my money, I wouldn’t personally invest in it today.
Energy
In 2020, a record 160m barrels of excess oil were stored in giant oil tankers outside the world’s largest shipping ports. Demand had fallen off a cliff.
And by mid-April, the price of a barrel of West Texas crude dropped below $0 as sellers had to pay get rid of it. Consequently, Shell (LSE: SHEL) shares lost half their value inside three months, dipping to £10.62 on 20 March.
Since then, though, oil prices have rebounded sharply, sending the stock up 120% in the process.
Today, it sits at £23.24.
Last year, Shell reported record profits of $39.9bn on the back of soaring oil and gas prices. That was double the previous year’s total and the highest in its 115-year history.
Clearly, I would have made terrific returns buying the stock back then. But would I buy Shell shares today?
No, I wouldn’t actually. And that’s despite the new $5bn share buyback programme and 15% dividend increase just announced.
Basically, before I invest, I’d like to see the company flesh out what it could look like in future without fossil fuels. But the firm has just committed to keeping oil production steady for the rest of the decade.
So for me, the long-term investment case has become more clouded, despite the shareholder-friendly capital returns.
