AGAINST THE SELLOFF: Renk "reloading", Barrick Gold positive, Desert Gold share set to multiply?

Desert Gold: Analysts remain bullish

"As valuations adjust to the improving reality on the ground, Desert Gold remains a promising exploration and development company with great potential," say the analysts at GBC Research. In their latest study, the experts have renewed their "Buy" recommendation for Desert Gold shares. The target price is EUR 0.29. Yesterday, the share was trading at EUR 0.043 on Tradegate.

From the perspective of GBC analysts, the environment for the Company operating in West Africa is improving noticeably. However, the stock is still valued based on a worst-case scenario. Therefore, there is significant upside potential. With an expanding gold resource at a prime location in the vicinity of major players, the Company stands to benefit from the brightening mood among investors. In addition, the chance of securing a strategic partner or a full acquisition is also increasing.

What makes Desert Gold so interesting? The Canadian company is currently developing a 440 km² gold project in Mali. The SMSZ project is transected by two of the most significant gold faults in West Africa. The current mineral resource (proven and indicated) is around 1.1 million ounces. Due to the recently acquired historical drilling data, the resource could increase to over 1.5 million ounces. This makes the Company a takeover candidate. Several companies active in the region, such as Barrick Gold, B2Gold, Allied Gold, and Endeavour Mining, could be interested in a takeover.

The stock has been trading in a narrow sideways range for the past year now. If the environment in the region continues to improve – and it looks like it will – significantly higher prices should be possible.

Barrick Gold: Turnaround in production and costs?

Barrick Gold shows that the environment for Desert Gold is improving. Reuters cites an internal memo from a Barrick manager. According to the memo, Barrick remains "fully committed and committed to reaching a mutually beneficial solution" with Mali to end the dispute over the assets there. The Canadian mining company and the Malian government have been in dispute since 2023 over the implementation of the West African country's new mining law. In mid-January 2025, Barrick then temporarily suspended mining operations in Mali. In mid-February, Reuters reported that the two parties had signed an agreement to end the dispute. However, official approval within the government is still pending.

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Analysts also believe the issues at Barrick Gold to be priced into the stock. Most recently, UBS upgraded the gold company's rating from "Neutral" to "Buy." According to the analysts, Barrick is currently valued at a discount to its peer group. However, 2025 could see a turnaround in production and costs. In other words, while production is expected to increase again, costs could decrease. From the analysts' point of view, Barrick could increase its gold equivalent production by more than 30% by 2030. It would likely also have to make one or two acquisitions to do so. If the issues in Mali are resolved, Desert Gold would be an obvious choice.

From UBS's point of view, the fair value of Barrick shares is USD 22. The security is currently trading at just over USD 18. In comparison, the upside potential for Desert Gold is many times higher from GBC Research's point of view.

Renk: Analyst advises "reloading"

Whether Renk shares are still a buy after the spectacular price jump of recent weeks is open to debate. Berenberg remains one of the Renk bulls. This week, the analysts reiterated their "Buy" recommendation for the transmission specialist for tanks like the Leopard 2. The target price was raised from EUR 33.30 to EUR 44.40. The target price increase is due to the geopolitical paradigm shift and Europe's continuously rising defense budgets. Analysts see a rearmament cycle that could last for a decade. Investors should, therefore, "reload" on defense stocks.

Renk's shares are currently trading just above EUR 34. JPMorgan considers this to be a fair valuation. The upside target is EUR 35. The analysts have, therefore, given Renk a "Neutral" rating. They are bullish on the sector and optimistic about rising defense budgets. However, the shares of Renk, Rheinmetall and Co. have already performed well.

The upside potential for Desert Gold is significant. GBC Research sees multiplication potential for the share. The outlook for Barrick Gold is also brightening, but UBS believes that the upside potential is limited. Defense stocks like Renk are a hot topic. The long-term potential is high, but the stocks have already performed very well. A larger correction would not be a surprise.