The financial markets were mixed in June as investors leapt from dizzying highs on the prospect of economic recovery and central banks fiscal stimulus to big sell-offs as worries of a second-wave of COVID-19 contamination in China, Japan, India and a number of US states took hold.
Current sentiment suggests it is becoming increasingly important to identify stocks that provide value and quality in equal measure and it has become a bit of a mantra here at The Armchair Trader that this is not a time to consider businesses with large amounts of debt, high running costs and a business model that does not work under a total or partial lockdown.
With the threat of COVID 19 still very apparent to the global economy, investors would do well to find agile businesses that will come out of 2020 with solutions that are compatible with these changing times.
The Armchair Trader’s June picks
Nasdaq and Helsinki-listed real estate group Citycon was added to our watchlist on 28th May. The team here at The Armchair Trader feels this stock offers good prospects for investors seeking value and expects to see the share price rise as the Nordic economies move back to full strength after lockdown. Citycon expects to publish more detailed information on its trading and results as well as the impact of COVID-19 in its Q2 report in July.
We followed up on our original article on 27th April as Canadian media group Thunderbird Entertainment (CVE:TBRD) rose 37% in a week as it reported revenue for the first three months of the year. Competition in the streaming entertainment area is only expected to become more fierce going forward. Thunderbird appears to be well-positioned to emerge from the Covid-19 epidemic with its business and key commercial relationships intact, and a growing demand for its content.
Finnish online retailer Verkkokauppa.com caught our attention on 28th May as it filed a listing application with Nasdaq Helsinki. The business has an Amazon style scalable business model with a strong balance sheet – it is also debt free. We added Verkkokauppa.com to our watchlist on 1st June.
We added start up electric trucks venture Nikola Motor Company to our watchlist on 8th June. The business looking to develop hydrogen powered and electric battery trucks and could stand to transform the way that road haulage works. We at The Armchair Trader have always liked business stories which we feel have the legs to take part in what is going to be an enormous and rapid switch from fossil fuel energy to electric and the business is already well down the road towards having a production line with actual vehicles being delivered to buyers.
Royal Mail was added as our Short of the Week on 22nd June. Shorting of the stock by hedge funds has been mounting steadily from the end of February. BlackRock Investment Management has been building a large short position during May and into June as we approach the latest set of Royal Mail results. If the next set of numbers are anything short of bullish, there may be little support from investors for the current share price range.
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Here’s how our picks are performing
|Company/Instrument||Start price||Current price*||Percentage change|
|Nikola Motor Company||73.27||67.53||-7.8%|
|Royal Mail (Short)||181.25||182.25||-0.6%|
Prices as of close of play on 30th June 2020
Removed from The Armchair Trader’s current watchlist: None
Data sourced from SharePad. The UK’s no.1 investment data & analysis software for Private Investors as voted for by FT/Investors Chronicle readers. Discover the advantage at www.sharescope.co.uk/sharepad.
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