Introduction
While we scan for and review many potential themes regularly, only a few at any time are likely to make it to Current Themes.
The criteria to make a current theme is based on our 5 thematifive© factors – please see the Our Process page.
As themes are based on medium term trends, we try not to review or change these too often. We do however undertake a Quarterly Review for new themes and continuation of current themes.
Watch out for our next Quarterly Review outcomes in April 2024.
While the spot price rose in a relatively short timeframe from c. $30/lb to over $90/lb (see previous theme), the new fuel-contracting cycle has begun with uranium producers are locking in long-term contract prices at over $70/lb with escalations. We believe that the improved outlook for quality producer’s long-term earnings is not substantially reflected in their current share prices.
With global geopolitical tensions likely to remain high, the government spending allocations to this sector are likely to trend upwards. The sector itself is now more technology driven, and the nature of modern defense is likely to be different from before e.g. a focus on unmanned and remote approaches. Key component and new-technology providers will potentially benefit from this geopolitical backdrop.
US REITs have suffered a c. 20% lower return over the past two years compared to global equities. Being sensitive to interest rates, we see the future expected trend of lower rates as being supportive, while the sector has also modernised and shocks such as Covid are behind us. REIT investing is a stock-pickers market, however, as quality and value varies greatly both across and within specific REIT sectors.
Gold prices appear to have stabilised at a relatively high level. Support is provided by central bank continued steady purchasing and limited growth in supply. Geopolitics and interest rates peaking also indicate lower volatility. However, while the upside in gold prices may be limited, gold miners typically tend to out perform when prices are stable and delivering good cash flows and margins. Company specific risks are an important factor and the theme will not support all players.
Industrial robots are not new. But robotics is expanding in sectors such as healthcare, households, logistics, and agriculture, etc. at a remarkable pace.
Supported by AI, this may become a surprisingly important long-term growth sector to invest in.
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