Investing is hard. It can be lonely, and it can be demanding, but most of all it can test our patience. The problem is that in today’s market there are always so many reasons to sell. One only has to switch on the news to find a reason. Just this week, airstrikes in Iran have people in a pickle worrying about World War Three. This time last year we were worried about stagnant US growth. The year before it was something else.
Peter Lynch once said that bull markets climb a wall of worry, and it’s easy to see what he meant. Despite the overwhelming evidence of stock markets globally trending higher, many always choose to be bearish.
However, it pays to be optimistic.
Right now, these three sectors are where I think there may be some fantastic buying opportunities.
Oil & gas
With Greta Thunberg and the launch of the Extinction Rebellion, climate change is on everyone’s lips. But the reality is that the world still revolves around oil. Yes, the change to electric vehicles may be growing – but right now petrol engines far outweigh electric, and will do for years to come. Electric vehicles are expensive, and emerging nations will use whatever fuel they can to power their own industrial revolutions.
Quality production companies that are low-cost operators will be able to weather any storms that hit the non-lean operators first.
Technology
Tech has always been hot, and it always will be. The profit potential from technology companies – those that get it right, at least – is eye-watering. High gross margins that can be realised because of a scalable platform can deliver large returns for shareholders.
Of course, tech is also always risky, as there is never any guarantee that the business will run smoothly. But, that’s part and parcel of the investment opportunity. People who want more reward have to be willing to take on more risk in order to achieve that return. Sometimes the market has simply mis-priced a company completely.
By doing our research, putting in the hours, and looking at the quality of the businesses and financial statements, we may just be able to find the next hot stock early.
Copper
Copper is used in everything from electronics and transportation equipment to building construction, machinery, and consumer products. Demand for this metal – especially for electric vehicles – will grow, which means those companies that are able to supply copper efficiently could be in the money. To determine whether a copper company is economically viable, look at its all-in costs for production compared to its selling price.
Companies that have large amounts of cash sitting on the balance sheet may also be able to take advantage of straggling competitors. Getting exposure to this metal, in the right company and stock, could prove be a very astute investment in 2020 and the coming years.
