The List: What to Buy at the End of the World
It’s like 2008 again in the resource sector… It doesn’t matter who you are or what assets you’re sitting on, your stock is getting killed.
For example… Potash (POT) is the best collection of fertilizer assets in the world. It has lost 27% in the past three months. Freeport McMoRan (FCX) owns the world’s largest copper and gold mine. It has lost 40% in the past three months. Cameco (CCJ) is the “best of breed” uranium producer, with an incredible portfolio of assets. It is down 35% in the past three months. Smaller, more speculative resource companies are down more than 50%.
It’s a total bloodbath.
During times like this, intelligent resource investors get started on their “trophy lists.” All you need to do is make a list of elite copper, oil, gold, uranium, fertilizer, and silver assets you’d like to buy at panic prices… That way, you can enjoy the stupendous “bad to less bad” rebound that typically happens after big wipeouts. And you can end up controlling a stake in the world’s most vital raw materials.
In today’s essay, I’ll share with you a few “trophies” that could end up as screaming bargains in the next six months. I encourage you to put them on your watch list today.
Before I get to my list, I want to give you an idea of how profitable buying a trophy during depressed conditions can be… Have a look at this chart of the aforementioned Freeport McMoRan (FCX).
During the 2008 crisis, FCX fell more than 80%. It bottomed below $10 per share. When a bit of “normalcy” came back to the market, the stock began a two-year, 500% rally.
Many resource stocks saw similar gains. And I’m expecting something a lot like that when today’s market reverses. So I’ve put together a “shopping list” of trophy resource assets…
For each stock, I’ve listed a brief description, a view of how far the shares have fallen from their recent highs… and how far they would have to fall from here to get to their “end of the world” 2008 lows…
These companies are the biggest, brightest stars in the commodities universe. Each one of them owns a portfolio of the best assets in the industry. When the market finally bottoms out, these are the companies I’m going to look at first.
Don’t mistake this for a “buy now” list. It’s not. Many of these stocks are way off their highs. But that doesn’t mean they can’t fall more… They could fall down as far as their 2008 lows… or farther.
In short, we can’t know how long the bear market in resources will last. It could be over in a week. It could be over in a month… or a year. But once these hated, beaten-down stocks form a bottom and start displaying a bit of price strength, it will be time to buy. Hundreds of percent gains will follow.