Next year at this time, we will celebrate the 400th anniversary of what’s considered the first Thanksgiving.
You know the story. Colonists who had come to America aboard the Mayflower and celebrated the harvest with the Native Americans.
I had forgotten it was a three-day feast. Most of us today gather for one big meal, although leftovers usually last a few more days.
Still, Thanksgiving retains the multiday celebration. It’s just that we now fill the days with food, family, friends, football … and shopping.
I wrote to you a little over a week ago about how my own shopping trip made me more bullish than ever. (You can read it here.)
The return of retail and consumer spending is just one example of investing in a post-COVID world. We can all be thankful we’re getting closer to that day.
The market is already looking ahead to those days. Earlier in the year we had the distancing and work-from-home trades, and now investors need to be thinking about the proximity trade …
The vaccine news in recent weeks has been spectacular, giving us all hope that we can put the pandemic behind us and get back to normal in the first half of next year.
Vaccines from Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX), Moderna (NASDAQ:MRNA), and AstraZeneca (NASDAQ:AZN) are proving to be safe and highly effective. And with Operation Warp Speed in place, companies are already beginning to manufacture the vaccines even before approval — first Emergency Use Authorization (EUA) and then full approval.
The head of Operation Warp Speed said this week that the first vaccines will be given just 24 hours after the go ahead. Pfizer has an FDA hearing on December 10, so authorization could come almost anytime from that day on.
This is great news anytime, but especially as cases are rising heading into the holidays and the winter months.
An effective vaccine is obviously a game changer … and a world changer. As investors, we can’t ignore that kind of change.
There are multiple ways to consider investing in a post-COVID world. The first and most obvious are the vaccine makers themselves, like the companies mentioned above. Their stocks have been bouncing around lately, but with the news mostly out there, additional upside could be somewhat limited at this point.
Then there are the “picks and shovels” plays. This is often one of my favorite investing strategies.
During the California Gold Rush, the folks who made the most money weren’t always the gold miners. They were people like Sam Brannan, the first millionaire of the Gold Rush who made his fortune selling pots, pans, shovels, and picks to all the people looking for the gold. Or Levi Strauss, who started producing a new kind of durable pants for the miners and struck it rich that way.
The manufacturing and distribution of vaccines for not just the United States but the whole world will require A LOT of picks and shovels. Think vials, syringes, cold storage, medical waste, transportation, tracking, and on and on.
Becton, Dickinson & Co. (NYSE:BDX) is the world’s largest maker of syringes, and it has committed to making nearly half a million syringes to be used in multiple countries. It’s a pretty big company with a $66 billion market cap, but it should benefit some. I often prefer the smaller picks and shovels plays where additional sales can move the needle more (if you’ll pardon the pun).
And most exciting of all is what I call “the proximity trade.”
The proximity trade means buying high-quality businesses that got hammered because of distancing but can thrive as we start getting back together.
When you buy the depressed shares of companies that have been hit by a serious but solvable problem, the gains can be extraordinary when things work out positively.
So, think about that. We’re talking airlines as people start flying again. (I’ll be on a plane several times over the next month.)
Hotels as people travel again.
Casinos. Sports. (I can’t wait to be able to go to a game again.) Entertainment.
Or getting a little further off the beaten path, a company I recommend in Early Stage Investor is a great example of the “social proximity” trade I’m talking about.
NIU Technologies (NASDAQ:NIU) is an urban mobility company. Basically, that’s electric scooters and e-bikes, which have been in high demand in crowded cities around the globe
It is based in China, where the pandemic originated. As a result, first-quarter revenue and earnings dropped, and the stock lost 40% as it fell from $10 to $6.
Today? It’s trading over $30 and has soared nearly 370% since I recommended it.
It makes sense. Asian and European cities are struggling with air pollution. Their governments are mandating shifts to electric vehicles. And as for super-populated cities like Guangzhou and Shanghai in China, well, talk about “social proximity!”
This is just one example of why investors need to look forward, not back.
The results can be huge, and now is the time to get in position to take advantage of a vaccine developed in record time allowing life to get back to normal soon.
On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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