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The new coronavirus has fundamentally replaced the investment landscape. Many sectors already in trouble, such as electricity and physical retail, have noticed that their slow decline turns into an abject decline. Other corporations, such as video game and software corporations at home, are booming. Many corporations that first dived are now becoming massive rebound actions.
For example, it might not be possible for Indonesian copper miners or Brazilian payment processors to be beneficiaries of the existing economic situation. However, it is some of the off-radar rebound actions that are thriving today.
Here are 3 unexpected bounce moves that are coming back massively this summer:
In March, the coronavirus pandemic is in full swing. Freeport-McMoRan fell below $5 and investors were scared. But shortly after the inventory reached that low level, I noted that the company’s CEO had spent millions to buy the inventory and also presented a positive forecast. Of course, coronavirus has depressed short-term economic activity and therefore requires base metals. The market, however, has only taken this inconvenience into account and has lost sight of the possible recovery. Fortunately, shrewd investors were able to take advantage of this poor price.
While the United States is still suffering to fully control the pandemic, in China and many other countries around the world, economic activity is reaching “normal” levels. As a result, commercial buyers are returning to the copper market.
As a result of this recovery in demand, global copper inventories are declining and are now well below average grades for this time of year. And now the value of copper has risen by 3% since the beginning of the year. FCX’s action followed this trajectory. It has now generally increased by 14% in 2020.
In fact, part of the copper fortress is due to the closure of mines in Chile and Peru. However, Freeport-McMoRan has a higher production despite the headwinds.
Surprisingly sound forecasts led analysts to review their profit estimates. While there is likely to still be a slight annual loss on the cards for this year, the gains consistent with the steady percentage will gently exceed $1 next year, assuming gold and gold costs remain around existing levels. The company has invested heavily in new projects that will bring even more production online. This can lead to EPS to $2 in the coming years.
Risks persist, of course. It is possible that the recovery of the global economy simply goes back and that the virus will make a moment or a third wave. But long-term hard trends are likely to drive Freeport’s copper costs and stocks well above what they do today.
In July, Baidu announced plans to increase investment in cloud computing, synthetic intelligence, knowledge centers, and other new infrastructure over the next 10 years to prepare for the “smart economy of the future.”
“The new infrastructure, which includes technologies such as AI, cloud computing, 5G, [Internet of Things] and blockchain, will drive China’s economic progression in the coming decades,” said technical director Haifeng Wang.
To identify a long-term techno leadership position that anticipates, the company has developed a plan to make five million smart cloud servers operational by 2030 and exercise five million artificial intelligence professionals in five years.
There is no guarantee that Baidu’s great synthetic intelligence ambitions will translate into physically powerful profit growth, but the company is heading in the right direction. We also know that Baidu succeeds and has a solid balance with more than $20 billion in money and equivalents. And thanks to the recovery of economic activity in China, the company is expected to earn around $6.50 consistent with a steady percentage this year, up to about $8.50 next year. At this profit point, inventory would be sold for only 15 times the profit.
Trying to buy a smart inventory in a bad market is a recipe for failure. And in early March, that is precisely what appeared to be an investment in Brazil’s payment processor PagSeguro: a failure. Inventory had fallen 70% since its $50 high last September to less than $15. But since that minimal, inventory has more than doubled. This makes it one of the most productive inventories in one of the most affected inventory markets in the world.
Since the beginning of the year, PagSeguro has risen by 30%, the Brazilian inventory market as a total is still down. Brazil’s troubled inventory market is not a mystery, as the country faces one of the worst coronavirus outbreaks in the world. Political uncertainty is also increasing.
Meanwhile, PagSeguro continues to take the percentage of place in the market from its competitors. This stable expansion in the percentage of place in the market is a direct result of the company’s strategy to attract millions of small and micro distributors to its platform. In a way, it looks like Square style (NYSE: SQ) in the United States. Get a solid position with active small businesses, then use it to create a broader monetary platform. Like Square, PagSeguro is launching an online bank to expand its business. Brazil is an underbanked country, so there is plenty of room for a disruptive monetary enterprise to succeed in the untapped channels of the past.
Moreover, society seems to benefit from coronavirus in two ways. First, PagSeguro’s main visitor base of micro-distributors is the type of vendors who cannot take refuge on the site. They have paints to eat and therefore continue to work around the coronavirus crisis in Brazil. Second, the PagSeguro platform offers contactless invoices. Due to fear of viruses, contactless bills are gaining popularity against cash.
In the long term, PagSeguro’s strategy looks a lot like Tencent’s successful style (OTCMKTS: TCEHY) introduced in China with its WeChat platform. Many Chinese use WeChat Pay as a kind of virtual janitor to perform dozens of tasks. They can book a ride by car sharing, make contactless transactions on the user or online, buy plane and exercise tickets, invest in stocks, pay for the costs of the app and even purchase and manage their fitness insurance.
PagSeguro bank develops a set of similar programs that consumers can use through its platform. Conclusion: PagSeguro is doing incredibly well in a complicated macroeconomic environment. Despite short-term obstacles, stocks can reach new highs by 2021.
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