Investors Need to Act Fast on the “Social Proximity” Trade

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The world has been living under “social distancing” rules for two months now – even longer in some places. It typically involves staying at least six feet away from others and avoiding crowded spaces.

The good thing about social distancing is that it’s a proven tool for fighting pandemics and preventing new outbreaks.

But from a financial perspective – which is our perspective – the bad thing is that social distancing forces a lot of great businesses to set out the “Closed” sign.

The good news is that some of these businesses are already showing early signs of roaring right back. In tomorrow’s Monthly Issue of Early Stage Investor, which includes my #1 stock pick now, I explain how this meteoric rebound is creating the best opportunities now.

I’m sure you’re seeing the same data and the same articles I’ve seen over the past few weeks…

COVID-19 new deaths and infections are trending way down in Italy, Germany, and Spain. Georgia – which was one of the first U.S. states to start reopening its economy – is not seeing a flare up in new cases.

Thanks to the latest data (plus increased testing and better awareness of what we need to do), I believe those trends will continue. If they do, then the worst of COVID-19 could be behind us. And while we won’t be getting back to “fully normal” for a while, we will get back to something that will start to look and feel like normal.

I call it the “new normal.”

That means it’s time to look ahead… and start putting money to work with the “social proximity” trade in mind. Making the “social proximity” trade means buying high-quality businesses whose stocks were beaten down and are set to thrive as we start getting back together.

One of these Early Stage Investor companies, NIU Technologies (NIU), reported earnings yesterday, and it’s a classic example of the “social proximity” trade I’m talking about.

NIU is an urban mobility company. Basically, that’s electric scooters and e-bikes, which are in high demand in crowded cities around the globe. NIU’s competitive edge is that its all-electric scooters are “smart” vehicles, with 72 sensors that connect to the cloud. Each rider downloads the NIU E-Scooter app to see when maintenance is due, etc. This data also allows the company to improve and innovate.

NIU’s home base is China, which is where the pandemic originated. As a result, it saw first-quarter revenue and earnings drop. But in yesterday’s earnings call, the company announced current-quarter revenue projections – and it says it’s moving back to growth mode. The stock rallied to a new 52-week high today.

In other words, NIU is already back above where it was before the bottom dropped out in mid-February.

It makes sense. Asian and European cities are struggling with air pollution. Their governments are mandating a quick, drastic shift to electric vehicles. And as for super-populated cities like Guangzhou and Shanghai – talk about “social proximity!” At the end of the day, China is China, and no pandemic will change that.

That’s just one example of why the rewards for looking forward – not back – could be huge.

When you buy the deeply depressed shares of companies that have been hit by a serious but solvable problem, the gains can be extraordinary.

If an asset sells off 50% because of a temporary crisis, it has to soar 100% to get back to where it was. (That’s about what NIU just did!)

If an asset sells off 60% because of a temporary crisis, it has to soar 150% to get back to normal.

Already, with my Crisis and Opportunity Portfolio at Early Stage Investor, which I launched on April 1, the average gain since inception is 27.5%! And I’ll be adding my #1 buy to that list in tomorrow’s issue.

It’s another great stock that’s able to rebound from this serious but temporary problem we’re all facing.

I believe my #1 bet on “social proximity” could easily triple our money over the coming two-three years. Click here if you want full details in tomorrow’s Early Stage Investor.

P.S. Whatever you do, you need an approach that’s radically different than what’s been discussed in the financial news. Forget Clorox (CLX). It’s fine if you just want a modest dividend, but it’s just not a long-term growth play.

Instead, start creating little engines of hypergrowth inside your account to make up for any February and March losses.

And there’s one corner of the market where you can find these hypergrowth stocks today.

That’s where we’re focused for our Crisis and Opportunity Portfolio. I’ll be adding another player to the lineup in tomorrow’s Early Stage Investor issue, plus I’ll be announcing my Top 5 stocks for the month. Click here to learn more.

Matt McCall’s MoneyLine Podcast

Click here to listen to Matt McCall’s MoneyLine podcast! This week, Matt wants to know if you’re a short-term trader or a long-term investor? He also discusses the question: Is it worth it to invest in China? There are many styles of investing, and Matt goes over what he believes is the best investing mindset for 99% of investors. He also talks about the future of sports and so much more.

You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.

Learn where Matt McCall sees
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