January 5th, 2022 | 11:10 CET
Avoiding penalties with Bayer, MAS Gold and BASF
Table of contents:
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Bayer - When will calm set in?
The pharmaceutical and agricultural giant was able to report whatever it wanted last year. Promising cooperation, new approvals, and, most recently, the Company's announcement that the Leverkusen-based renal drug Finerenon could also be sold in the European Union in the future - none of these had a positive impact on the share's performance. Experts even believe that the new drug will generate annual sales of more than USD 1 billion.
Instead, the main focus of stock market players continues to be on the risks inherent in the agricultural division since the Monsanto takeover. The latest bad news about the acquisition, which has been the subject of controversy among the public, is the threat of a capital investor test case in Germany. According to the Tilp law firm, by December 30, the end of the statute of limitations period, around 320 investors had filed lawsuits for damages amounting to EUR 2.2 billion. The accusation is deception about the economic risks of the Monsanto takeover.
The current chart performance of Bayer stock should be interpreted positively. Despite further disruptive factors, the share price was able to form a double bottom at EUR 44.90 and is gradually approaching the breakout point at EUR 48.05. A sustained breakout could release upside potential to the next major hurdle at EUR 56.84. Various analysts are also currently optimistic about the Bayer share. The US investment bank JP Morgan reiterated its "overweight" rating with a price target of EUR 75.00. The Swiss bank UBS sees a buy candidate with an even higher price target at EUR 85.00.
MAS Gold - Prepared for the rise
The performance of the precious yellow metal was a disappointment for many investors last year. Nevertheless, the conditions for a long-term gold bull market are still in place. Rising inflation figures, dramatically growing government debt and interest rates that remain at a low level could make both gold and silver the winners of the new year.
In the process, attractive valuations of gold producers and exploration companies are slowly inviting countercyclical entry after the correction that has been underway since August 2020. At MAS Gold, several factors are coming together that could significantly impact the share price next year. First, the Company is digging for gold in the Canadian province of Saskatchewan. This place has historically stood out for its good legal framework and first-class infrastructure. The other major asset of the Company is the gathering of mining veterans, represented to the outside world by CEO Jim Engdahl.
In the La Ronge Gold Belt of north-central Saskatchewan, the Canadians operate four properties totaling 33,843 hectares, including the Greywacke Lake, Preview North, Elizabeth Lake and Henry Lake properties. Late last year, a letter of intent was signed with Concast Metals for MAS Gold to acquire 100% of the Preview SW property. The 843-hectare Preview SW property is adjacent to Preview-North and hosts historic resources with a cut-off grade of 0.50 g/t gold.
In addition, a formal agreement was signed with Eros Resources granting Eros the exclusive right to earn a 17.5% interest in all of MAS Gold's current properties by funding exploration expenditures of CAD 3.5 million over a six-month period. CEO Engdahl commented, "We would first like to thank Eros for this transaction to fund our 2022 winter drill program. This positions MAS Gold well to further enhance our key assets in 2022."
BASF - Buyback in the big picture
This shows confidence in one's own Company. Share buyback programs have a long tradition at the Ludwigshafen-based chemical group. The Group recently bought back shares for almost EUR 10 billion between 1999 and 2008. "Given the positive business development as well as divestments in 2021," BASF intends to buy back shares for EUR 3 billion by the end of 2023," the DAX-listed Company announced.
The go-ahead for this is to be given this month and completed by the end of 2023 at the latest. Investment bank Jefferies left its price target for BASF at EUR 85 and a "buy" rating due to the announced share buybacks.
Household financial assets are rising. However, the threat of punitive interest rates and rising inflation could reduce savings account balances. A switch to equities and precious metals would be one way of escaping this dilemma. BASF and Bayer are viewed positively by analysts, and the trend at MAS Gold is pointing in the right direction.
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