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July 14th, 2022 | 12:43 CEST

Attention: BASF, Viva Gold, ThyssenKrupp - Stocks with good turnaround opportunities!

  • Gold
  • Energy
  • renewableenergies
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In view of continuing high inflation data, investors worldwide are looking for stability, which is currently difficult to find due to increasing geopolitical tensions. Strongly fluctuating stock and crypto prices are the daily companions. Even the real estate markets are affected by the sharp rise in interest rates in recent months, especially in the commercial sector. The bond market has already had its first sell-off, and bond prices have even trended upward again recently. The energy policy with Russia, an important supplier, appears to be decisive for the continuation of the economy. Should the gas tap be turned off, Central Europe will have a serious problem. We highlight a few anomalies from the equity sector.

time to read: 4 minutes | Author: André Will-Laudien
ISIN: BASF SE NA O.N. | DE000BASF111 , VIVA GOLD CORP. | CA92852M1077 , THYSSENKRUPP AG O.N. | DE0007500001

Table of contents:

    Bill Guy, Chairman, Theta Gold Mines Limited
    "[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited

    Full interview


    Gold - A safe haven with high insurance costs

    Following major market turbulence in the equity and bond sectors, growing uncertainty about the global economic situation has now also hit the precious metals sector. Major producers of gold and silver have had to watch as selling prices on the spot market have been gradually pushed down. Thus, the precious yellow metal fell from USD 2,080 to USD 1,720. Silver fared even worse with a discount of 28% from USD 26.20 to USD 18.95. For the producing mines, the calculation is one-dimensional; they have to sell their mined metals to be able to operate the mining plants, including the staff. At current prices, an estimated 85% of all operations are still operating in the green zone; exploration is naturally a high expense factor due to high energy prices.

    One should expect precious metal prices to rise in tumbling markets. However, since high inflation and the holding costs of physical metals have a negative effect on the price, the forward prices for gold and silver are under permanent pressure. Should inflation gallop at some point, a significant rebound of precious metals would probably be expected, because the immanent idea of value protection would then prevail, which could also develop into a buying panic in an emergency. At the moment, however, this is not the case because the protagonists in the gold sector likely still have no real idea where the current central bank policy will take us.

    Viva Gold - Dormant precious metals right on Walker Lane in Nevada

    In uncertain times, there is also a particular demand for gold reserves in the ground. In 2017, the Canadian explorer Viva Gold secured a 4,250-hectare property in Nevada with a prospecting license. It lies within the historically well-known Walker Lane, where Kinross, Coeur Mining, Augusta and Centerra also operate. There have also been spectacular acquisitions in this district in recent years, for example, with the Bullfrog Mine.

    At the depressed level for precious metals, good projects, in particular, provide an attractive long-term entry opportunity. Nevada has been rated third in the world by the Fraser Institute as a mining-friendly US state. That attracts large corporations such as Barrick and Newmont, as they are always on the lookout for new deposits to keep their production constant.

    The Company's Tonopah Gold Project is located only 30 km from Kinross's Round Mountain mine, producing more than 250,000 ounces in a year. In the current market situation, a medium-sized project with an estimated and suspected 600,000 ounces can quickly become a desirable target, as North America offers not only good jurisdiction but also sufficient mining history to attract personnel. Furthermore, the location allows for open pit mining, which is the most favorable form of rock processing.

    Viva Gold shares are traded in Canada and Frankfurt. With 91.6 million shares outstanding, the 5-year work on the project is valued at only CAD 7.5 million. 56% of the shares are held by institutional investors and management. At one point in 2021, the stock was twice as high. It could also quickly return here in the next gold rush.

    BASF and ThyssenKrupp - Energy becomes the linchpin

    Anyone looking to invest in stocks after the big sell-off should pay attention to balance sheet quality and long-term business prospects. In the case of Ludwigshafen-based BASF, both attributes are combined in one share because the 157-year-old company has already survived a number of crises and is currently realigning itself. On the one hand, the Board of Executive Directors is concerned about the Company's enormous dependence on energy. On the other hand, it wants to become a zero-emissions company by 2050 in accordance with the Paris Agreement. According to CEO Dr Martin Brudermüller, however, the two can be combined well: "Without sufficient quantities of electricity from renewable sources at competitive prices, the transformation ahead of us cannot succeed! This task can only be mastered through a new kind of intensive cooperation between politics and industry. And it needs cooperation across value chains."

    As a formerly very energy-intensive company, ThyssenKrupp has several ideas for the energy transition: Store, convert and adapt consumption! One of ThyssenKrupp's goals is to make the use of renewables reliable. The fact that renewables still produce varying amounts of electricity depending on the weather is to be mastered by innovative storage technologies. Other key areas are projects such as Carbon2Chem and load management, i.e. adjusting consumption to the energy supply. Even though the stock market situation made an IPO of the hydrogen subsidiary Nucera impossible, the Duisburg-based company will leave a strong footprint in the German energy industry in the coming years. This focus fits very well into sustainable portfolios with a modern focus.

    BASF and ThyssenKrupp have experienced a real sell-off in the last 3 months. Within a year, both stocks fell by 40%. The current prices of EUR 41.20 and EUR 5.10 respectively are already far below their book value. Rarely does one get future-oriented standard values so favorably offered. The date, July 21, 2022, is important: On this day, the pipeline of Nord Stream 1 is to supply gas to Germany again. You should probably wait until then, but if you think optimistically, keep your eyes open for a balanced long-term buy.

    High volatility and falling share prices are testing the patience of the long-term investor. When to sell, when to buy, always the old game. We look for interesting stocks and describe the opportunities and risks. BASF, ThyssenKrupp and Viva Gold are well positioned for the long term and are already far from their highs.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

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