Now that Donald Trump will become the next president of the United States, it’s important to adjust your portfolio to take advantage of the new environment. There are obvious sectors and industries that you’ll want to gain exposure to, including infrastructure, defense contractors and banks, but the one I want to talk about today is coal.
One thing I find especially interesting about this area of the market is that it actually appeared to “know” that a Trump victory was possible. So to understand how amazing the coal rally has been, let’s take a look at two charts.
The first shows coal prices over the last seven years. President Barack Obama broke the back of coal and killed a big chunk of the industry during his two terms in office. And Hillary Clinton had promised to the kill the remaining coal jobs in her push to subsidize and usher in clean energy.
But on the other side of the coin, Donald Trump ran on a fossil-fuel-energy independent platform.
Take a look at the move in coal that began this summer. Its price more than doubled heading into the election, which tells me that the market somehow knew something that the pollsters and mass media didn’t.
Naturally, lots of major names have already made mind-boggling moves since Trump became our new president-elect. United States Steel Corporation (NYSE:X) is one of them, skyrocketing more than 17% the day after the election and allowing my Smart Investing subscribers to lock in a huge 31% win.
I wouldn’t chase X here, but there is one company north of the border that I like, and it once helped me beat all the TV stock pickers.
The stock is Teck Resources Ltd (USA) (NYSE:TCK), which is Canada’s largest diversified resource company and North America’s largest producer of steelmaking coal. It has operations and projects in Canada, the United States, Chile and Peru. TCK stock recently reported earnings, and while it missed consensus, the company saw quarterly and annual production records. This resulted in a major increase in consensus for the current quarter as well as the year.
The company also saw margins increase:
- Steelmaking Coal: 35% from 28%
- Copper: 37% from 33%
- Zinc: 35% from 34%
Early signs are that the Trump economy has already begun to take off. My brother-in-law is in the scrap metal business and says demand instantly surged through the roof. And the charts above show you that coal is also already on the move. I suggest jumping on the train before it leaves the station for good.
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