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I’m hoping to have cash to invest in my Stocks and Shares ISA later this month. Here are a couple of shrewd investments I’ve added to my list of possible buys.
The stock
Shipbroker Clarkson (LSE:CKN) endured a miserable August as panicked investors headed for the exits. It fell by double-digit percentages after a frosty reception to half-year financials at the start of the month.
Could the sell-off be signs of an overreaction by the market however? I think so. Revenues and underlying pre-tax profit both slipped 3% in the six months to June. However, this needs to be seen in the context of the ultra-strong comparatives of a year earlier.
Encouragingly, Clarkson kept its full-year forecasts unchanged.
One of the main things I like about the FTSE 250 firm is its ultra-progressive dividend policy. It’s raised shareholder payouts for 21 straight years.
And thanks to its strong cash generation, it raised the interim dividend again — by 7% — despite the aforementioned profits drop.
Investing in cyclical companies like this can be a bumpy ride at times. As a supplier of ship financing, logistics services and maritime research, earnings can take a smack during economic downturns.
However, from a long-term perspective, I think the future’s extremely bright here. Demand for shipping will steadily rise in line with the growth in international trade. Around four-fifths of goods are transported via sea.
And with its strong brand name and presence on six continents, Clarkson’s in great shape to win lots of business looking ahead.
The ETF
Commodity price volatility’s only one common risk that mining companies have to endure. Problems at the exploration, project development and production phases can be common. And these can take a big bite out of earnings.
Investors can reduce, but not eliminate, this risk by purchasing an ETF that holds a variety of different miners though. One such fund on my radar today is the Global X Copper Miners ETF (NYSEMKT:COPX).
The fund invests in dedicated copper miners alongside more diversified operators. The 40-strong list includes leading producers like First Quantum Minerals, BHP, Glencore and Antofagasta.
But why buy the ETF now? With copper prices falling sharply in recent months, so has the value of the fund. It now trades on an historically low P/E ratio of 13.6 times.
I think this could represent an attractive dip-buying opportunity for long-term investors like me to consider. Copper demand is poised for strong growth thanks the growing green economy and continued urbanisation.
Indeed, Bloomberg analysts think demand will rise to 43m metric tonnes by 2050, up from the 26m recorded in 2022.
This Global X fund has delivered an attractive average annual return of 19% over the past five years. I think it could be a great way to target big returns from the copper boom.