In my just completed Special Report: “Your Investment Guide for the Next 6 Dangerous Stock Market Months” on my JubakAM.Com site I wrote that I’d look to add some coronavirus recovery stocks to my portfolio during weakness in the November time period–looking looking toward better economic growth, a stimulus package, and positive news on a vaccine in 2021.
The idea is to find stocks that will begin to anticipate a 2021 recovery–based on a coronavirus stimulus package in January and the wide deployment of an effective coronavirus vaccine beginning with applications to the U.S Food & Drug Administration in late to mid-November. The logistical hurdles to deploying a 100 million doses of a vaccine that might require two shots per patient and that might need constant refrigeration to 50 to 70 below are immense. And I expect a full out war in the financial markets between vaccine optimism and vaccine pessimism in the early part of 2021. Still, I expect that hope and anticipation will win out and drive the market higher toward the end of the first quarter. And I’d like to have a few positions in place before that first month in 2021. And, if November through December proves as volatile as I suspect it will, I hope to be able to pick up some of these positions on the dip.
I’d start with copper because the commodity is extremely sensitive to trends in the global economy, and it has already been moving up on signs that China’s economy is picking up speed (a bit.) That the price of copper is more strongly tied to growth in the Chinese economy right now than to growth in the global economy is a good thing because the Chinese economy looks likely to lead in the post-coronavirus recovery. The International Monetary Fund recently forecast that the global economy would contract by 4.4% in 2020 but upped its forecast for China to 1.9% growth in 2020.
My choice here is Southern Copper (SCCO), which gets about 80% of its revenue from copper (and the rest from mining “by-products” such as gold) produced from its mines in Peru and Mexico. The stock pays a 3.33% dividend so you collect something while you wait through the ups and downs of this market. I’m adding these shares to my Dividend Portfolio today, Tuesday, October 13.
The shares closed today, October 13, at $47.39, down 1.19%.