The stock market has sold off sharply since the start of April, with some shares falling 20% or more. I’ve been using this weakness to add to a couple of holdings in my Stocks and Shares ISA.
So here are two that I bought in recent days.
Mining mayhem
One of the worst-hit sectors lately has been mining. The Glencore (LSE: GLEN) share price, for example, has plunged 20% in a month, bringing the two-year loss to 50%!
This makes sense, of course, as the Trump administration’s tariff war with China could weaken demand for raw materials. Mining is cyclical, so a major slowdown in the global economy is a risk to the sector here.
However, as well as being a major copper producer, Glencore is also one of the world’s biggest commodity traders. This means its trading division can make big profits during periods of massive turbulence, like in 2022, and possibly now.
Longer term, I fail to see how surging demand for copper — which is used in everything from electric vehicles (EVs) to solar panels and turbines — when combined with constrained supply will not lead to much higher prices. Therefore, Glencore’s profits should one day be significantly higher than they are today.
So why didn’t I buy this FTSE 100 stock then? Well, I tend to avoid individual mining stocks as they’re a bit risky for my liking. Production at strategically important mines can run into trouble, for example.
But the FTSE 250‘s BlackRock World Mining Trust offers diversification through a range of companies and metals, including gold. It has Glencore as one of its top holdings, as well as other copper giants such as BHP and Freeport-McMoRan.
The current dividend yield is 5.14%, which is higher than Glencore’s 3.63%. I see it as a less risky option for my portfolio.
Of course, the same risks apply here. Another sell-off in metals could cause future earnings to dip sharply across the sector. However, analysts at Jefferies recently said that hammered mining stocks could now be attractive “for those who can ride out the near-term volatility”.
I agree, so I bought more shares of BlackRock World Mining at 395p.
Shocking Shopify sell-off
Another stock I bought after a massive dip was Shopify (NASDAQ: SHOP). The stock lost 23% in just two-and-a-half days near the start of April!
Shopify’s platform allows businesses to easily set up and run an online store. Last year, its share of the US e-commerce market reached an impressive 12%, while international revenue grew 33%.
In 2023, the company sold its capital-intensive logistics business, a move that has markedly improved profitability. Its free cash flow margin grew sequentially each quarter last year, reaching 22% by Q4. And for the full year it reported an operating profit of $1.1bn on revenue of $8.9bn (26% year-on-year growth).
Now, I accept this is an incredibly volatile holding, even more so when a global recession could impact growth. Also, the stock’s still pricey, even after the recent 23% pullback.
However, the global e-commerce market is projected to expand at a compound annual rate of 15.2% from 2024 to 2033, according to Precedence Research. And Shopify’s revenue is tipped to soar above $19bn by 2028. I remain bullish.
