But first, it's worth noting that the Workhorse (WKHS) recommendation from my May 27th True Market Insider has worked out well for us.
The stock is up 159.3%, shooting up from $2.68 to $6.95 at yesterday's close.
One grateful reader wrote in to say...
"Someone in your office emailed an interesting piece about WKHS (Workhorse Group inc). I purchased the stock on 5/27 at $2.67 based on his analysis.
As of this moment the stock is $7.31.
"I would like to know who this person is so I can thank him.
It also would be nice to hear more from him."
Done and done! My name is Doug Fogel and you will be hearing more from me.
Thank you for the kind words... and you are welcome.
Our March 17 bullish play on Spain has also done well.
The EWP Oct 15 call option (EWP is the iShares MSCI Spain Capped ETF) rose from about $4.50 to $8.15 for a gain of 82.2%.
But let's leave Spain for the moment and return to India...
According to the Hindustan Times, between 2005 and 2016, India slashed the number of people living in poverty from 630 million to 360 million. That's a reduction of nearly -43%.
During that period, per capita GDP grew 129% -- from Rs 38,750 to Rs 88,746. That growth transformed India into a lower middle-income economy. (Rs stands for rupees – the national currency of India – which currently trades at about 76 to the U.S. dollar).
To say the world has taken notice of India's resurgence would be an understatement.
According to Zacks, a well-known market research and investment management company, foreigners invested more than $4 billion in local Indian shares during Q1 2020, the highest investment in Asia for that time frame.
If you're a typical investor, the easiest way to play India is through an exchange traded fund (ETF).
And since May of this year, Indian ETFs have been on a tear.
For example, First Trust India NIFTY 50 Equal Weight ETF (NFTY) and Columbia India Consumer ETF (INCO) were the country's top performers in May, with about 17.5% and 14.4% gains, respectively,
Indian Prime Minister Narendra Modi seeded this bullish trend in March, when he announced a hefty stimulus package of over 20 trillion rupees ($265 billion), which equates to an estimated 10% of the country's gross domestic product.
The purpose of this stimulus was to counteract the economic fallout from the coronavirus pandemic, particularly in rural areas, where most of the money is supposed be directed.
Another factor that bodes well for India's economy is the weather - long-range forecasters from the Indian Meteorological Department are calling for a normal monsoon.
This is important because strong monsoons are seen as market-friendly because they portend high crop yields.
Here are three additional reasons to be bullish on India:
Demographics – The country boasts a youthful, educated and growing workforce which should help support economic growth.
Economic Diversity – At $3.2 trillion, India's GDP makes it the fifth-largest economy in the world. And it offers investors exposure to a wide range of sectors, including consumer goods, pharmaceuticals and knowledge-based services such as IT, software and business services.
Stable Government – India has maintained a strong parliamentary democracy since it achieved freedom from Great Britain 73 years ago. And since 2014, when Narendra Modi was elected prime minister, India has vastly improved its economy. It has done so through a number of key reforms, including a nationwide goods and services tax that replaced a patchwork of state-level excise taxes.
There are a number of Indian ETFs you can play, but I like the iShares India Small-Cap ETF (SMIN) best.
The reason is that small caps are domestically oriented, and likely to fare better as spending increases in rural India (recall that stimulating rural India was the primary purpose of the country's massive stimulus).
Right now SMIN trades at $29.71, which is more than $8 below its pre-pandemic value of about $38.
And it's nearly $24 off it's all time high of $53.36 (January 2018) before the coronavirus selloff in March... and off its all-time high of $53.56.
I see SMIN at least hitting that nest key resistance level near $38 (the red dotted line). That would give us a gain of 28%.
If it reaches the blue line ($40, another key level) we'll see a 35% return.
But ultimately, I see no reason why it won't regain its March 2019 level in short order... and I wouldn't be a bit surprised if it tested its all-time highs before the year is out.
There are no SMIN options that I'd recommend. So the only way to play it is to buy SMIN outright.
That's it for today.
But before you go...
Go here and save a seat in tomorrow's investor event with Chris Rowe.
Chris is going to talk about a strategy he uses to reduce risk (potentially to zero)...
While pulling cash out of long positions.
Don't miss it.
Cheers,
Doug Fogel
Editor, True Market Insiders
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