One of the best ways to spot opportunity is to hunt for temporary weakness.
In fact, it’s how some of the most famous investors made their money.
As Warren Buffett would say, “Be fearful when others are greedy and greedy when others are fearful.” Or, as Sir John Templeton would say, “Buy at the point of maximum pessimism.”
We’ve found three stocks where temporary weakness could create long-term opportunity in
biotech, gaming, and mining.
Hot Stock No. 1 – Anavex Life Sciences (AVXL)
While the stock recently pulled back, use the weakness as opportunity. Near-term, we’d like to see AVXL break from consolidation and potentially test prior highs near $30.
All as it progresses with a potential treatment for Alzheimer’s disease.
For one, the company just reported that the “predictive biomarker of response established with SIGMAR1 mRNA expression correlates significantly with responses in primary and secondary clinical efficacy endpoints from the proof-of-concept randomized, double-blind, placebocontrolled Phase 2 trial that randomized 132 patients with Parkinson’s disease dementia equally to target doses of 30mg, 50mg ANAVEX®2-73 or placebo, respectively,” as noted in a company press release.
Two, according to a Christopher U Missling, PhD, President and Chief Executive Officer of
Anavex, as quoted in a company press release, “We are pleased with the rigorous and efficient execution of the confirmatory late-stage Precision Medicine ANAVEX® 2-73 Phase 2b/3 randomized, double-blind, placebo-controlled clinical trial with a total of 509 patients with Alzheimer’s disease and are excited to be able to provide top-line data by 2H 2022.”
With further progress, we could be looking at a massive game-changer here for Alzheimer’s.
Hot Stock No. 2 – Activision Blizzard (ATVI)
Activision Blizzard was knocked down on fears of litigation and a Chinese crackdown.
However, we’d use weakness as an opportunity here, too.
For one, the stock is technically oversold. After gapping from about $91 to $80, the stock found solid support, and could easily refill its gap, near-term. Analysts at Citi are just as bullish, upgrading the stock to a buy rating with a price target of $105.
Two, video game sales show no signs of slowing.
According to Gamespot.com, “U.S. video game spending in the second quarter of 2021 has
increased 2% to $14 billion over the same period in 2020. According to the NPD Group, overall consumer spending on video games for April to June 2021 totaled $14 billion, a small increase over last year’s massive numbers, which were boosted by the pandemic.”
Hot Stock No. 3 – Lithium Americas (LAC)
The lithium bull market is far from over.
All with countries around the world pushing for millions of electric vehicles to hit the roads. Helping, President Biden unveiled an executive order targeting 50% of U.S. new car sales to be electric by 2030, as reported by Barron’s. In fact, according to a new study by Ernst & Young, electric vehicles will outpace combustion engines in the next 12 years, according to The Street. “By 2045, non-EV sales were seen plummeting to less than 1% of the global car market.”
With that, all will boost the need for far more lithium supply.
Unfortunately, the world is running short of supply, which could fuel a good deal of upside for lithium prices and related lithium stocks.
Even the International Energy Agency warns, “The supply of critical minerals crucial for technologies such as wind turbines and electric vehicles will have to be ramped up over the
next decades if the planet’s climate targets are to be met. At least 30 times as much lithium, nickel and other key minerals may be required by the electric car industry by 2040 to meet global climate targets.”
It’s another reason investors may want to consider lithium stocks, such as Lithium Americas.