Three of the stocks that are on my investing radar for January are the two FTSE 100 mining giants, Rio Tinto and Anglo American, and the British luxury brand and retailer, Burberry. Why am I writing about these three together? Even if the connection between the two miners is unmissable, on the surface it’s hard to see the link between the miners and the luxury brand.
The answer lies in the market they all cater to, namely, China. Thanks in big part to the massive stimulus spending underway in the country, it’s expected to bounce back in 2021. Even after lowering its growth forecast for China in 2021 recently, the International Monetary Fund still expects it to grow by a huge 7.9% in the year.
Clearly, this should work in favour of all the three FTSE 100 stocks — RIO, AAL, and BRBY. We wouldn’t have to speculate for long either.
All three are due to release their updates later in the month, which will tell us definitely how they are doing. For this reason, they are on my investing radar.
Here’s a quick look at how they’ve performed recently:
#1. Burberry: improving Asian growth
In its last update in November, BRBY was still seeing falling revenues but reported double-digit growth in Asian markets like China and South Korea. Its US market was also growing well, even as others struggled.
I reckon that with China having successfully dealt with Covid-19 last year and better economic growth expected for the US in 2021, BRBY can see improvements going forward.
Realistically, its market may not boom for a while — the contrary in fact — but it can start mending itself. In anticipation, investors have already driven up its share price but I think there’s more to come.
#2. Rio Tinto: cyclical play
Typically one wouldn’t expect an industrial metal miner to perform in an economic slowdown, but RIO has done exactly that. In fact, its share price is near multi-year highs right now. China’s stimulus vastly improved commodity demand, impacting miners like RIO positively, even while the global slowdown ensued.
There’s reason for continued optimism on the stock. Copper prices are at highs, in line with expectation of better economic times, which should also work for RIO.
However, in its update, I would like to see what it has to say about the expected softening in Chinese growth, since that is a big market.
#3. Anglo American: better times
In another article yesterday, I wrote about AAL in the context of Friday’s share price decline. As a financially healthy company and a well-established one, I find it hard to understand how its share price fall can be sustained when commodity demand could be on the upswing.
For this reason, I’m curious about AAL’s next update, due later in the month, to figure out if there’s something we should know about the company.
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Manika Premsingh owns shares of Burberry. The Motley Fool UK has recommended Burberry. 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.