The financial markets have been having a good time of it since the correction back in March last year. It has left many investors feeling that markets are artificially high and due a retracement.
Backing up this argument, we are seeing bond yields increasing and low interest rates set to go up once central banks finish their current fiscal stimulus programs. All of this seems to be too much for many investors as the end of February saw them sell out of equity markets – most notably, tech stocks.
Fears may subside in the short term with the US stimulus package set to boost the US economy further. However, as vaccination programs start to take effect and the world moves out of lockdown in to more normal conditions, the possibility of further equity market falls as central banks use the tools available to them to manage their economies should not be overlooked.
The Armchair Trader’s February picks
US stock Raytheon Technologies [NYSE:RTX] has been gaining strong support of late, despite hitting the headlines for the wrong reasons. We are optimistic about prospects for the business: it has the cushion of a solid defence business which will continue to see demand in 2021, but the attractive qualities of an aviation division that is going to come back online as the pandemic retreats. Analysts were impressed by the last set of numbers and we can see many institutional investors wanting to get back into the stock now as it represents a more conservative, real economy play without some of the frothy numbers we have been seeing from the technology sector. The stock was added to our picks on 25th February.
While the UK high street might be taking a pounding from the pandemic at the moment, online fashion retailer Sosandar (LON:SOSS), a challenger to Boohoo’s crown, has been doing very well during lockdown. We noticed the movement in the share price on 17 February as the stock began picking up massive buy side volume. At the time it was trading at around the 13.50 mark, but has since built on that. Volumes are not at the levels we saw at the time of writing, but it certainly still looks bullish. We added Sosandar to our picks on 26th February.
The end of the month tech sell-off saw us stopped out of Australian cloud technology play Atlassian [NASDAQ:TEAM] in February, soon after adding it to our pick list. The stock represents a solid mid-tier play in the ongoing growth of cloud services and it reports many of its corporate customers are now moving off a server-based data model to a cloud-based one. While our strict 10% drop rule came in to play, this still represents an interesting opportunity.
By way of an update on our picks this month, Euro Manganese secured further funding, HempFusion applied for regulatory approval in the UK, Taat’s online channel enabled them to sell across the US while Christina Lake Canabis won exclusive rights to distribute Taat’s Beyond Tobacco products in Canada. ProStar has just launched a dealer program for its flagship PointMan product while Brigadier Gold provided a positive update on their Picachos project in Mexico. Nano one launched their ESG-friendly technology for car battery cathode production and Harvia results show the business is going from strength to strength.
Here’s how our picks are performing
|Company/Instrument||Start price||Current price*||Percentage change|
|Taat Lifestyle & Wellness||1.26||3.70||+193%|
|Christina Lake Cannabis||0.83||0.91||+9.6%|
*Prices as of close of play on 26th February 2021
Removed from The Armchair Trader’s current picks for March: Gold, CityCon, JPMorgan China Growth & Income, Sotkamo Silver, Senseonics, Atlassian