May 3rd, 2021 | 13:53 CEST
Barrick Gold, Desert Gold Ventures, BP - The commodity bulls are getting ready to jump!
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
BARRICK GOLD CORPORATION - Q1 data on May 5
Gold performed very well in 2020, marking an all-time high at just under USD 2,100 last summer. 2020 saw vast inflows of gold-backed exchange-traded funds, which explained the excellent performance. At the beginning of this year, the precious metal was still trading well above USD 1,900. Currently, the price is consolidating below the USD 1,800 mark. The fundamental bullish gold scenario was clouded in recent days by good US economic data. According to this data, the US gross domestic product increased by 6.4% in the first quarter compared to the previous quarter - the third quarter in a row - and exceeded market expectations.
Nevertheless, a whole series of arguments suggest that the gold price should still be significantly higher this year. Goldman Sachs cites several reasons: a falling US dollar, rising inflation expectations and an economic revival in the emerging markets. In addition, the experts also expect higher copper prices. Given these prospects, the shares of the world's second-largest gold producer are almost an obvious choice. Barrick owns many of the world's most productive gold areas and also has many first-class copper projects. What higher commodity prices can do for producers was impressively underpinned by the figures for the past fiscal year.
At prices of around CAD 26, the large-cap Barrick is valued at CAD 47 billion. Given the excellent quality of the commodity portfolio, which extends over 13 countries, the Canadians have a profitable operating business and net cash and undrawn credit lines, thus a strong market position overall. This conclusion is also reached by the majority of analysts covering the stock. On average, the experts formulate a price target of CAD 35.75, representing an upside potential of around 36%! This Wednesday, May 5, the Group will publish its Q1 figures.
DESERT GOLD VENTURES INC - It remains exciting
Desert Gold Ventures is a Canadian gold exploration and development Company focused entirely on deposits in the African state of Mali. While Mali may not be immediately familiar to some investors as a resource-rich country, its position as Africa's #4 gold producer is noteworthy. Mali is also popular as a jurisdiction. Many major players are active there, some close to Desert Gold Ventures. The Canadians' portfolio focuses on two gold exploration permits with large land areas: the SMSZ project and the Djimbala project in western Mali.
In mid-April, the Company announced an update on the SMSZ project. There are 5 large mines near the SMSZ project, both north and south. According to company reports, the 410 sq km property is the most extensive contiguous non-producing land package in this region of the country. Furthermore, exploration drilling is progressing well, with just over a quarter of the planned 20,000 meters of drilling currently completed. In places, up to 1,452ppb of gold has been discovered. Results available to date have also identified 10 additional target areas.
The ongoing exploration program will continue to provide investors with exciting news in the coming weeks. The SMSZ project is enormous. Good results could quickly catapult the price into other regions. When gold was trading at nearly USD 2,100 last summer, the stock was at CAD 0.35. Now, just CAD 0.18 is being called on the stock exchange, bringing it to a very manageable market capitalization of CAD 25 million. Investors should not lose sight of this potential doubler.
BP - Share buybacks start in the second quarter
Last week, the oil price climbed to its highest level in over a month. Both Brent and WTI were trading near 52-week highs. The short-term price driver was a combination of declining US petroleum product inventories and emerging stronger demand from global consumption. In the wake of vaccination advances and a pickup in economic activity, the US government reported that petroleum inventories fell last week. In addition, the US investment bank Goldman Sachs Group was very positive about the short-term prospects for black gold and expects an unprecedented jump in global oil demand in the near future. In an interesting snapshot, gasoline prices in California climbed to USD 4 a gallon last week for the first time in a year and a half as restrictions were eased. Elsewhere in the world, such as India and Brazil, on the other hand, hardship is growing, reminding us that massive setbacks on the road to normalcy can occur at any time.
BP shares should also benefit significantly from the positive macro environment described above. On April 27, the USD 85 billion group published its Q1 figures and was able to inspire. Thanks to disposal proceeds, solid operating business development in combination with a higher price level, the Group succeeded in generating a strong cash flow. As a result, this had a positive impact on the net debt target, which has now been achieved one year early. BP plans to start buying back shares again in the second quarter. The attractive dividend policy will be continued. Currently, the stock has a 2022 P/E of a moderate 9 and promises an annual dividend yield of around 5%. All in all - the stock has upside potential.
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