June 29th, 2022 | 10:06 CEST
BASF, Globex Mining, Barrick Gold - Stock pickers, beware!
Price increases, inflation, rising interest rates and geopolitical risks - As an investor, one can get nervous. Despite all the challenges and uncertainties, depressed stock price levels offer an inviting risk-reward ratio. The big picture continues to favour commodity investments. Potential is not only to be found in the top dogs. Looking at the second tier is often more rewarding than one might think.
time to read: 3 minutes
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Author:
Carsten Mainitz
ISIN:
BASF SE NA O.N. | DE000BASF111 , GLOBEX MINING ENTPRS INC. | CA3799005093 , BARRICK GOLD CORP. | CA0679011084
Table of contents:
Author
Carsten Mainitz
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.
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BASF - Expectation management
Shares in the Ludwigshafen-based Company have fallen by around a third in the last 12 months. The business environment is becoming increasingly difficult. Company director Dr Martin Brudermüller does not mince his words and points out the serious dangers. By formulating conservative targets, the CEO also lowered the bar for market expectations. Warburg analysts see the potential for positive surprises for companies like BASF that are cautious about the future.
The broad-based chemical group recently announced that it intends to invest more in the circular economy at its Schwarzheide site in Lusatia concerning battery materials production and recycling. At the beginning of 2024, it plans to start a plant for recycling black mass from batteries. Black mass contains large amounts of lithium, nickel, cobalt and manganese and is obtained by mechanically treating batteries at the beginning of the recycling process.
"The closed-loop from spent batteries to cathode materials for new batteries supports our customers along the entire battery value chain, reduces dependence on mined raw materials and enables a circular economy," elaborated Peter Schuhmacher, head of BASF's Catalysts division.
Globex Mining - Anticyclical and broadly positioned for success
The Canadian Company Globex Mining owns a large diversified North American portfolio of mid-tier exploration, development and license properties at over 200 projects. In doing so, Globex acts anticyclically, buying when commodity prices or companies are down. When markets start to heat up, the Canadians are on the sell side, turning the projects over for cash, shares or a license fee.
The Company, led by CEO Jack Stoch, has followed the strategy successfully for nearly 40 years. As a result, the Canadians have been able to build up a significant cash balance. The key to success is that Globex explores on its own account, investing at least CAD 1.5 million each year.
Most recently, Globex reported results from the Phase 1 drill program totaling 4,462 meters from Maple Gold Mines. The program was undertaken to test potential extensions of mineralization along the formerly producing Eagle-Telbel trend. As a result, additional zones of gold mineralization were discovered. Globex holds an option to acquire the property.
With Globex, investors participate in a broad portfolio of high-opportunity projects in the categories of precious metals (gold, silver, platinum, palladium), base metals (copper, zinc, lead, nickel) and critical commodities. With a market capitalization of only about CAD 60 million, the stock market has so far inadequately priced in the Company's potential.
Barrick Gold - Surprise potential
When will the breakthrough come? In view of geopolitical risks and sharply rising inflation, new highs in precious metal prices seem to be on the cards for the longer term. The price of the precious yellow metal above USD 1,800 is historically high. Rising energy costs could nevertheless somewhat cloud the track record of the world's second-largest gold producer.
In the current fiscal year, the Canadians plan to produce between 4.2 to 4.6 million ounces of gold and 420 to 470 million pounds of copper. Related expenses will range from USD 1.9 billion to USD 2.2 billion. According to company statements, production costs (AISC) will rise to between USD 1,040 to USD 1,120 per ounce of gold and USD 2.70 to USD 3.00 per pound of copper. However, since the Group only calculates with a gold price of USD 1,700 and a copper price of USD 4.00, there could soon be positive surprises. Most analysts take a similar view, believing that the stock has an upside potential of almost 50% in the next 12 months.
Opportunities also present themselves in stormy times. The analyst community believes that top dogs BASF and Barrick will catch up in the coming months. With a market capitalization of around CAD 60 million, Globex Mining is certainly under the radar of most investors. But it is this fact, the proven track record, a high cash balance and an extensive portfolio that make the stock worth a closer look.
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.
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