10. May 2021 | 09:40 CET
Ballard Power, Varta, Defense Metals: This trend is still in its infancy
All investors want to invest in the future. But what does this future look like? For many private investors, hydrogen was the topic of the future for many months. But hydrogen investors are now pretty much left out in the cold. Car manufacturers have turned their attention to battery cells, and there are other opportunities for investors to profit from the technologies of the future. But what about the current representatives of hydrogen technology? Are the opportunities for entry favorable right now? Or should investors take to their heels?
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Ballard Power: Investors must watch out for these brands!
Ballard Power's stock has taken quite a beating over the past three months: the value lost 60%. Ballard Power is a Canadian manufacturer of fuel cells. Last week, the Company presented quarterly figures - and they were truly terrible. In the first quarter of 2021, the Company made only a little less than CAD 18 million in sales. That shows that the Company's business is not at its best.
Ballard Power made a name for itself early on around hydrogen and sent hydrogen-powered buses on the road. The Canadians developed early collaborations with Chinese companies and also worked with omnibus manufacturer Alexander Dennis Ltd. At a time when hydrogen only plays a role for larger vehicles, Ballard Power could be perfectly positioned. But the market is currently aggressively pricing out risks. From a chart perspective, the stock has found short-term support above EUR 14. It would be necessary for the share to stalk its way back to the EUR 20 mark quickly. If this does not succeed, further setbacks are possible.
Varta: What is the battery hype all about?
The battery manufacturer Varta, which has been the subject of e-car hype for some time, has also lost some ground recently. The idea is obvious: The German automotive industry has decided to favor electric mobility and is now doing everything it can to become independent of suppliers from Asia. Battery cells are to be manufactured in Germany to achieve this. Since Varta is already very well positioned when it comes to batteries and accumulators, the consideration is obvious. But how concretely Varta's future looks is still unclear. The German industry is just now establishing supply chains and attracting partners. That Varta can play a role in this is obvious. That this role will be a big one, however, is not yet set in stone.
German industry has already rejoiced once over a supposed future sector that has been successfully established in the country. Companies like SolarWorld and Q-Cells were lifted into investor heaven - and crashed. The reason at the time: the Asian competition was simply cheaper. Although battery metals and other essential materials for battery production are in short supply, price ultimately rules. Even if it makes sense for Germany to become self-sufficient, this does not mean that companies with low margins will hold their own on the market in the long term. The e-car fantasy surrounding Varta makes the stock attractive, but investors should keep their feet on the ground.
Defense Metals: Rare earth project valued at only EUR 17 million ahead of feasibility study
Shareholders of the Canadian rare earth Company Defense Metals also remain on the carpet. Although the stock gained 18% on a three-month horizon, it has already corrected some of the rapid gains it made in February. What had happened? At the time, the governments from Canada and the US had committed to prioritizing rare earths and other critical metals around electromobility domestically and announced plans to support projects. Defense Metals' Wicheeda project has indicated resources of 4.89 million tons at an average grade of 3.02% light rare earth elements. Still in the first half of 2021, Defense Metals plans to submit a preliminary feasibility study and upgrade and expand its deposit in the summer.
Rare earths are needed in various electrical devices, such as smartphones, and in vehicles, batteries, and the defense industry. The latter use underscores the efforts of many Western industrialized nations to become less dependent on China. For years, China has dominated the market for rare earths. Only gradually are companies like Defense Metals following suit, even benefiting from government subsidies. Defense Metals' market capitalization is still only around EUR 17 million. Given the milestones that can still be reached in 2021 and the high demand for rare earths, investors should look at Defense Metals. Unlike hydrogen stocks, this trend still seems to be in its infancy.