September 6th, 2023 | 10:10 CEST
Attention gold breakout, sell AI stocks? NVIDIA, Globex Mining, and JinkoSolar - these stocks are calling for a party!
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"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
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.
NVIDIA - Dizzying valuation creates worry lines
A look at the financial data provides insight into the highly acclaimed company from Santa Clara (USA). NVIDIA gained over 200% in share value in 2023 alone, and in May, the stock market value reached the one trillion US dollar mark for the first time. According to Ernst & Young, the Californians are now the sixth most valuable company in the world. NVIDIA is a specialist for fast graphics processors, and in January 1999, the Company was admitted to the NASDAQ index. In the same year, they delivered the ten millionth graphics chip of the GeForce series. In the summer of 2022, the planned takeover of the chip manufacturer ARM failed. Instead, the Company is capitalizing on the high valuations and is now going public.
Although NVIDIA has to give price cuts of 20% to the market for its latest chip generation, analysts expect sales to double from USD 26.9 billion to USD 56.4 billion in the current fiscal year. This is due to the stormy development in the "Data Center" segment. Here, services for AI-related services are offered, which is currently fueling the enormous valuation fantasies. Earnings per share are expected to increase approximately fivefold in 2023 to USD 9.75. For 2024, the experts on the Refinitiv Eikon platform see a further increase in profits of 70%. Even with the increased revenue forecast for 2023, NVIDIA is currently trading at a price-to-sales factor of 20 and a P/E ratio of 49. This is tight and reminiscent of the tech bubble from the year 2000.
Globex Mining - The Silver Treasure in Saxony
Beyond high valuations, one comes across Globex Mining (GMX) in the commodities sector. The investment holding company, operating since the 1980s, buys and sells interests, mining rights and options. Founder and CEO Jack Stoch does not like big risks; he acquires assets only after careful consideration and looks for business partners who can fulfill their exploration obligations within the agreed-upon time frame. The portfolio now spans 232 properties, primarily in gold, but industrial metals also appear as an admixture.
Some assets are located in Europe, specifically in the German state of Saxony. In the Silver City concession area, soil sampling was completed in 2022 on the Ader Peter, Grauer Wolf, Harta and Frauenstein targets. The program's objective was to test the geochemical response along the section of known mineralization and identify new drill targets. Induced polarization surveys were completed in Q4 2022. Results have now been sighted and partner Excellon outlined its next steps in a recent press release. Silver City, located in the heart of the German Ore Mountains, comprises four mineral concessions totaling 340 sq km (164 of which are owned by Globex). Excellon has invested CAD 8 million in exploration in recent years and has completed a total of 22,000 m of the drilling program, 13,300 m of which are in the Globex license area.
Partner Excellon believes that the current time is favorable for mineral exploration in Europe, as the EU has adopted extensive measures to secure domestic raw material supplies. A new Saxon Raw Materials Strategy has recently been published, highlighting the importance of fostering a local mining industry. Excellon will evaluate the capital market for a spin-off of the project. The focus is on raising sufficient capital to fund the next exploration campaign. The proposed spin-off could see a significant uplift in value for both Excellon and Globex.
The current market capitalization of Globex at CAD 45 million is at a significant valuation discount for a total cash and securities portfolio of over CAD 25 million, including 232 properties. Separate listings of individual projects could potentially propel the value of the holding into a completely different dimension.
JinkoSolar - The solar boom continues
The crash of the Greentech star JinkoSolar gives food for thought. Last year, sales of the solar panel producer had doubled, but the profit margin declined by 30% due to more expensive raw materials. Sales are maintained this year, but margins remain under pressure. What is interesting, however, is that analysts expect a significant easing in the next few years. The share price has been under pressure for the past 12 months, currently at only EUR 31.70, compared to over EUR 60 in September 2022.
The bankruptcy of the real estate developer Evergrande and the difficulties of the highly indebted project developer Country Garden are depressing the valuation of Chinese shares and causing foreign investors to withdraw their money. The US plans to impose further import duties on the modules of Southeast Asian manufacturers, who are said to have tried to circumvent existing duties by exporting from Malaysia, Thailand and Vietnam. JinkoSolar is said to be unaffected by the punitive measures and can continue to meet the high demand with its highly efficient modules. With a P/E ratio of 4 for 2023, the stock is cheaper than ever.
Currently, the stock market is in a tech frenzy. Business models in the direction of Artificial Intelligence can achieve substantial price gains, although they will not become profitable for several years. In commodity stocks, the recent strength in gold could be a game changer, and Globex is excellently positioned for it. The high growth figures continue to speak in favor of the Greentech star JinkoSolar.
Conflict of interest
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