April 30th, 2021 | 08:40 CEST
BASF, Saturn Oil & Gas, K+S: Three stocks for a yield kick
Investors who want to add a few yield drivers to their portfolio have several options. In addition to solid blue chips, which offer little share price excitement but steady dividends, investors can also focus on growth stocks and small caps. Although there are always those who categorically rule out growth stocks for cautious investors, this is not entirely true. Those who control risk via position size can also invest speculatively without having to abandon their fundamental strategy.
time to read: 3 minutes
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Author:
Nico Popp
ISIN:
DE000BASF111 , CA80412L1076 , DE000KSAG888
Table of contents:
"[...] The Oxbow Asset now delivers a substantial free cash flow stream to internally fund our impactful drilling and workover programs. [...]" John Jeffrey, CEO, Saturn Oil + Gas Inc.
Author
Nico Popp
At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
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BASF: A Company in transition
First, we look at blue chips that grandfather already had in his portfolio. One of these stocks is undoubtedly BASF. The chemical giant from Ludwigshafen is a true global player and is active in around eighty countries. For long stretches of 2020, business was not exhilarating for BASF despite its solid market position. Costs are still too high. In 2020, this was exacerbated by the low prices for oil and gas. However, the latter problem should have dissipated by now.
The structural problems weigh more heavily in any case. BASF is therefore preparing to rethink structures and processes and wants to become leaner. At the same time, the Company has divested its construction chemicals business. On the stock market, BASF's problems are creating a diffuse picture in the long-term chart. Over three years, the share has lost 17.6%, but there is a solid profit of almost 50% over the year. Beyond the EUR 72 mark, the share could also pick up speed again in the long term. However, BASF remains a Company in transition.
Saturn Oil & Gas: What is the market waiting for?
The Saturn Oil & Gas share is also in a state of upheaval. What was once Canada's most profitable oil producer announced more than a year ago that it wanted to reinvent itself and turn a bigger wheel in the future. Specifically, the Company meant looking for takeover targets. To this end, Jean-Pierre Colin, a proven expert, joined Saturn as a strategic advisor in the fall. Since then, however, it has been quiet around the small but fine Company.
This silence, however, has not harmed the share price: the value is trending sideways and shows solid support. Anyone with many years of experience with Saturn Oil & Gas knows that it usually pays to wait and see. Even when Saturn was regularly drilling new wells and growing strongly organically, the management team always kept its word and pursued its goals consistently and quietly. The plans to use Saturn as a takeover vehicle and contribute its energy resources expertise to even larger projects are not off the table. Instead, the chart has signaled a certain tension since the turn of the year and is trending slightly upwards. As an expert in oil and gas, Saturn is well positioned in a market phase in which oil is again heading for USD 70. In addition, the prospect of a surprise is great. The stock remains speculative, but the management team, which has now been in place for many years, certainly has credit in the market. Saturn is suitable as a speculative portfolio addition and is good for surprises.
K+S: Caution, not a sure-fire winner
K+S has also been traded for months as a stock with prospects. In the long-term chart, the fertilizer specialist looks like an emerging comeback story. However, investors should also pay attention to the fundamental facts in addition to the price trend. There are not only positive signals here. Although rising commodity prices are a good signal for K+S, there are still gaps in the balance sheet, which recently led to write-downs. Although the allegations of irregularities in the balance sheet now seem to have been largely dispelled, investors should be aware that K+S is more of a problem child than a model student.
The share has already gained around 50% on a one-year horizon and continues to head for the EUR 10 mark. As soon as the value reaches a sustained double-digit level, the race to catch up in the direction of historic prices can begin. However, this will not be a foregone conclusion for the share. Instead of betting on K+S or BASF, which is complex to value with different business segments, investors can get an overview more easily with Saturn Oil & Gas. The Company is profitable at current oil prices and continues to work on inorganic growth. Possibly, these are the ingredients for a sustainable yield kick, even for smaller investment sums.
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