Given all that’s going on, I’ve been thinking about what’s the best way to invest. I noticed in my portfolio that there are some shares that benefit from the Coronavirus situation, and some that would benefit if it went away. Since enough time has passed that companies have released announcements covering periods operating under Coronavirus, it’s fair to say that companies that are coping under Coronavirus have had their share price correctly revalued with respect to this, and that being rid of Coronavirus would would only sent their value upwards.
Therefore putting a bob each way, or hedging an investment in a company that’s benefiting from Coronavirus with an investment in one that would benefit from its riddance could prove a good investment under all scenarios. So I thought it might be fun to make a list of pairs of stocks could collectively be good investments.
ATM & FPH
This is an obvious one. FPH has been selling humidifiers (which improve the performance of ventilators – required by Coronavirus patients) faster than they can make them and the share price looks like it could double under another year of Coronavirus. In the event of Coronavirus being eradicated, FPH may return to their normal growth trajectory (15% pa), though there’s a risk of dropping back closer to pre-Coronavirus levels if new buyers of humidifiers fail to see value / demand in their continued use. That said, this wouldn’t be the worst thing if (like me) you see FPH as a bond proxy and don’t mind the 1% dividend in a solid company.
ATM has recently had their share price ravaged as the lack of Chinese people (tourists, students, etc.) travelling from Australia caused the Diagou market to dry up. A cure in Australia & China could see the ATM share price double within a year. It has to be said that there is also downside risk from the current Australian-Chinese relationship.
ATM & DGL
Speaking of the current poor relationship between Australia and China, I think ATM & DGL could be another good pair for my list. If China bans Australian wine imports, this could be good for DGL who export a lot of their wine to China and might enjoy a lack of competition in the australasian arena.
I had thought that DGL exported a lot of wine to China because I remembered reading that on a share forum. Upon investigation, it seems that only 22% of their products are sold to Asia/Pacifica.
What other pairs can you think of?