Holly Black: Welcome to Morningstar. I'm Holly Black. With me is Rachel Winter. She is Investment Director at Killik & Co. Hello.
Rachel Winter: Hi, Holly.
Black: So, you are back for your monthly rundown of three stocks on your buy list. Where should we start?
Winter: Let's start with Amazon (AMZN), which is a company that we all know very well. So, we know that Amazon is a hugely successful online retailer that's done very well in the pandemic. We know that Amazon is a hugely successful cloud computing company. But what's interesting this week is the announcement that Amazon wants to acquire MGM Studios. So, that really shows that Amazon is making a push into content. And we know that the most successful media companies are the ones that own the most valuable content. For example, Disney has had huge success after buying Marvel and Pixar. That's gone incredibly well for Disney, and now it looks that Amazon is moving in the same direction.
Black: And do you think MGM is a sensible acquisition? Or maybe a bit too much?
Winter: It's costing over 8 billion. So, it is a very large acquisition price, but there's no doubt that Amazon can afford it. MGM does have a very valuable library of films, including all of the James Bonds and the Rocky films, Legally Blonde. And what's more, Amazon now has over 200 million prime subscribers, and it needs to have a lot of content on there to keep those subscribers happy.
Black: Okay. Onto stock number two.
Winter: Stock two is Antofagasta (ANTO), which is listed on the UK Stock Exchange and it's a copper miner. Over 95% of revenue comes from mining copper. We believe there will be a huge increase in demand for copper as the world goes electric, and in fact, last week, there was a report published by the International Energy Agency. And they said they don't believe the world is prepared for the change in commodity demand that will be required for all the electric vehicles, and the electrification that we need to undertake. And that is perhaps going to cause some supply shortages and therefore the price of copper could potentially rise, therefore benefiting copper miners such as Antofagasta.
Black: And this one seems like a bit of a conflict to work out, because sustainably minded investors will be happy about the transition to electric but maybe not so happy about investing in a miner. How do you think about that?
Winter: I think it's a personal judgment. Obviously, mining does damage the environment. But if we want to move away from fossil fuels towards electricity, then at the moment I don't believe we have any other option.
Black: Okay. What's stock number three? I hope it also begins with A.
Winter: It doesn't, unfortunately. It begins with T. It's TJX (TJX), which is the owner of T.K. Maxx. So, this is a massive global off-price retailer. Most of its business comes from physical stores rather than online and therefore, it has slightly suffered during the pandemic. But that said, this off-price sector has actually managed to gain market share because so many other retailers have actually closed down. So, over the last year, it's gained market share. And now, we feel that there is a real appetite for getting back to the shops now that people are allowed to, and we believe that TJX will really benefit as the economy starts to reopen.
Black: How is it as well that some stores can manage to survive and thrive even with no little or no online presence? It seems defying the odds, doesn't it?
Winter: It does, but I think TJX really offers a different experience. You don't know what you are going to find in there. So, I think people really enjoy that sort of treasure hunt that they get when they go into a store and you simply can't have that when you go online. So, I think that's the real appeal of the stores, and I think that's why they have continued to do so well.
Black: Rachel, thank you so much for your time. For Morningstar, I'm Holly Black.
