Time to Load Up on ‘TRaaS’ Stocks

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I tried to think of something else to write about today.

But there’s only one story dominating the headlines.

No, not the coronavirus.

Though that’s part of it…

No, I’m talking about the Great Aussie Toilet Roll Rush of 2020.

You must have read the stories by now?

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Pictures of empty supermarket shelves, shopping trolleys overflowing with the precious rolls of paper, and there was even an incident in Parramatta where police were called in.

As reported:

NSW Police confirmed they received calls from store staff following an incident that occurred at around 1:30pm this afternoon.

In a short statement, police confirmed that “at 1.30pm, police were called to a supermarket at Parramatta following reports of a disturbance in an aisle. It was established there had been a dispute. No arrests were made.”

I’ll spare you any bad poo puns or toilet humour.

Suffice to say, it appears the sh#t has hit the fan (sorry!).

Of course, the reason for the loo roll rush is the coronavirus panic.

As I wrote two weeks ago, if you’re going to panic, it’s usually best to panic early. I was talking about selling some stocks, but it would appear I should have noted the same for loo roll.

However, now that everyone is panicking, the reverse is usually true. Stocks I’m talking about, that is.

We’re getting close to the time when smart investors start looking for opportunities as everyone else panics around them.

Let me explain what I mean…

Making money from the madness

I did read one theory that the toilet roll hoarders aren’t necessarily living in fear of it running out.

No, these devious sneaks might have better ideas.

The idea is that if you buy a bunch of goods like medicines, toilet rolls, and essential food stuffs, you’ll have a nice little earner on your hands if things do get worse and we do start running out of stuff.

Indeed, it’s already happening…

Online mega-retailer Amazon has reportedly banned 10,000 users already for price gouging.

As reported in the UK’s Daily Mail:

Unscrupulous online traders have tried to cash in on the health emergency as stocks of hand sanitizer and face masks have run low in stores amid panic-buying.

Two-packs of Purrell hand sanitizer, which typically sell for $12, were marked up at $119.99 on Amazon this week as people tried to protect themselves from the virus.

A company spokesman told ABC: ‘There is no place for price gouging on Amazon. “We are disappointed that bad actors are attempting to artificially raise prices on basic-need products during a global health crisis, and, in line with our longstanding policy, have recently blocked or removed tens of thousands of offers.”

Is that fair?

The free marketer in me says it’s a tad nanny state. Although of course when it comes to stuff like medicines, I think some moral policing is needed, but the rest of the stuff…I’m not so sure?

Anyway, some companies are making hay in the situation the legal way.

Subscription toilet roll provider ‘Who Gives a Crap’ has reportedly had an eight-time increase in sales in recent months.

Toilet roll as a service (TRaaS)?

Who would have thought…?

Money Morning

Source: Pedestrian.TV

[Click to open in a new window]

That’s a private company, but there could be some stocks you might want to look at out of this too…

Look where others fear to tread…at the right price

My colleague Sam Volkering wrote a few days ago about some kinds of stocks that might benefit from the changes in behaviour brought about by the coronavirus.

‘The Coronavirus Portfolio’ The two-pronged plan to help you deal with the financial implications of COVID-19. Download your free report

He wrote about the ‘self-isolation opportunity’ in Friday’s (28 February) Money Morning:

Well maybe we all do stay in more and socialise at home or via other mediums. What about gaming companies, VR companies, streaming companies? If we’re going to be spending more time indoors then we’re going to be doing ‘indoorsy’ stuff.

Gaming, watching TV, streaming music, surfing the internet (more), chatting via messaging services, or FaceTime, or Portal, are all things we’ll do more of.

That’s good news for some of the giants of the tech world, Netflix Inc [NASDAQ:NFLX], Activision Blizzard Inc [NASDAQ:ATVI], Facebook Inc [NASDAQ:FB], Alphabet Inc [NASDAQ:GOOG], Amazon.com Inc [NASDAQ:AMZN]. But could mean a change of fortunes for some ASX-listed companies too.

Companies such as Esports Mogul Ltd [ASX:ESH], Emerge Gaming Ltd [ASX:EM1], and Animoca Brands Corporation Ltd [ASX:AB1] are all involved in e-sports or online gaming platforms. They’re all minnows of the ASX, but are all part of a world that’s fast becoming mainstream.

But I’m thinking, maybe there’s opportunity in no change too?

What I mean by that is, if this all blows over in three or four months, then perhaps beaten down travel, education, and China-focused stocks could end up being bargain basement buys now.

Or if not right now, maybe soon.

If you’re going to try and ‘buy the dip’ though, I’d advise being careful. To take advantage of other people’s panic, you need to make sure you get in as cheap as possible.

Put in a few low-ball bids on companies you like long term. But they have to be stocks you’ll be happy to hold if things get worse.

Picking bottoms is hard (this was an unintended pun I promise).

You probably want to look at solid companies with ‘real’ businesses rather than speculative stocks, if you try this approach.

They’ll tend to give you more margin of safety than a company with no earnings, little cash, and just a good idea.

Anyway, there’s an opportunity in this panic. In toilet roll if nothing else…

Good investing,

Ryan Dinse,
Editor, Money Morning

About Ryan Dinse

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately…

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