Could there be a stock market correction or even a crash before the end of 2025?
Nobody really knows. The predicted timelines of the next major meltdown are always speculation rather than a guaranteed fact. Nevertheless, there are some real storm clouds gathering on the horizon that have me concerned, especially since lofty share prices seem to be ignoring these real threats.
Consumer spending is weakening, inflation is proving stubborn, and economic growth remains elusive. Meanwhile, in the US, similar patterns are emerging with tariffs adding complexity to monetary policy, and a recent wave of job cuts hitting the labour markets. Yet in both cases, stocks are trading near all-time highs.
With that in mind, I don’t want to be caught napping when the next stock market crash does hit. But rather than wasting time trying to predict it, I’m focused on getting ready for when it does eventually arrive.
Bargain hunting in 2025
With UK and US stocks trading at record highs, I’ve been growing more cautious throughout 2025. I’ve trimmed some of my largest positions and started building up a larger-than-normal cash cushion. Why? Because if disaster does strike, some amazing buying opportunities with emerge.
Having said that, I’ve also been doing a bit of selective shopping.
There are still some terrific bargains to capitalise on today in both markets. And here in the UK, one stock that I’ve recently added to my portfolio is Ecora Resources (LSE:ECOR).
A hidden growth opportunity
The business offers unique financing solutions to mining companies, offering to help cover the cost of initial construction in exchange for a lifetime royalty or equivalent from a mining project.
Over the last five years, management has been restructuring its royalty portfolio to be concentrated in copper and cobalt, as well as other critical materials like nickel, rare earths, and uranium.
Given that demand for these materials is expected to grow exponentially over the long run, this strategic decision seems prudent. Yet in the short term, it’s caused quite a bit of volatility in earnings, adding complexity to the financials and causing nervous investors to jump ship since 2022.
However, this restructuring process looks like it could be on the verge of paying off. With multiple development-stage projects expected to enter commercial production in 2026 and 2027, the group’s revenue and profits appear primed to surge. And at an underlying forward price-to-earnings ratio of just 13, it seems the market hasn’t noticed this incoming growth catalyst.
What could go wrong?
Despite operating in the natural resources sector, Ecora is still sensitive to economic weakness in both the UK and the US.
Lower consumer spending on items like cars, gadgets, and computers, among others, means that manufacturers’ order books will take a hit. And with lower order volumes, demand for raw materials like critical metals will, in turn, suffer.
Even if demand remains robust, if other mining entities overshoot on the supply side, commodity prices may fall, putting pressure on Ecora’s royalties.
In other words, even at a cheap-looking valuation, buying Ecora shares still carries significant risk. Nevertheless, that’s a risk I feel is worth taking given the long-term growth opportunity, discounted share price, and diversification bonus the stock offers for my portfolio as the stock market approaches a potential downturn.
