October 27th, 2022 | 13:15 CEST
BASF, Tocvan Ventures, Alibaba - These shares are making headway
Table of contents:
"[...] Troilus has the potential to be an entire gold belt. All of our work to date points to this, and each drill hole makes the picture we have of the Troilus project much clearer. [...]" Justin Reid, President and CEO, Troilus Gold Corp.
BASF - Profits are melting
Falling gas prices are significantly reducing the worries of BASF's shareholders. The chemical giant has a high energy demand and is now able to take a deep breath. The crisis has again made the Company aware that it needs to be more resource-efficient in the future. For some time now, BASF has been investing in startups that deal with the circular economy. At the end of a product's life cycle, BASF's customers are supposed to return their products to the cycle. In this way, the Company wants to use fewer resources in the future.
Positive results were reported by the subsidiary Wintershall Dea, which significantly increased its profits YOY in the third quarter. EBITDA ended up at EUR 2.6 billion, compared with only EUR 983 million last year. The Group announced its Q3 figures on October 26. Although sales increased by 12% YOY to EUR 21.9 billion, EBIT before special items fell by EUR 517 million to EUR 1.3 billion. This was mainly due to high raw material and energy prices. To improve earnings, the Group aims to save EUR 500 million in costs by the end of 2024. Additional costs for natural gas alone amounted to EUR 2.2 billion in the first 9 months.
Despite the drop in profits, management is sticking to its full-year forecasts. However, falling gas prices should ensure better figures in the final quarter. The stock market is currently satisfied too, and the share is trading at EUR 46.31, an increase of 0.8% compared to the previous day. Once again, it has been shown that it is worth buying the share at EUR 40 because, for 12 years, the share has fluctuated between EUR 40 and EUR 95. Whether the dividend can be kept constant remains to be seen; if it succeeds, a yield of about 8% is expected.
Tocvan Ventures - Drilling program and a lot of marketing
The Canadian gold and silver explorer Tocvan Ventures is active in Mexico, more precisely in the state of Sonora, which is the largest gold producer in the country. The "Pilar" and "El Picacho" projects are located near producing gold mines. Both properties have enormous potential. For example, the Pilar project boasts up to 33.4 g/t gold and 1,090 g/t silver discoveries. The El Picacho project has historical results of up to 28 g/t gold and 110 g/t silver. Initial surface results from July confirmed the good results with up to 7.19 g/t gold and 197 g/t silver and also assayed 4.8% lead and 7.1% zinc.
On October 13, the Company was pleased to announce the start of preparations for the first drill program on the El Picacho property. Poor weather conditions caused a delayed start. Work is scheduled to continue on both projects until June 2023. At the Pilar property, 2,000m of infill drilling and 3,000m of step-out drilling are planned. At El Picacho, the San Ramon zone, which is 500m by 500m, is to be drilled. A total of 15,000m of drilling has been approved. In addition, surface and trenching in the identified zones will be further investigated to prioritize drill targets. CEO Brodie Sutherland said, "We are very excited to be back in Sonora as we prepare for our first drill program at El Picacho and continue to evaluate and prepare for the next steps at Pilar."
In addition to exploration work, the Company is looking to increase its visibility and awareness. To this end, the Company will present itself at the International Precious Metals and Commodities Fair in Munich on November 4 and 5. On November 2, the Company will be a guest at the TakeStock Alberta Investment Forum. In addition, an agreement has been reached with New to the Street TV, according to which the Company will be seen in Newsmax TV, Fox Business and Bloomberg TV formats. This will allow the Company to reach over 540 million households in the next 6 months. In addition, there will be social media advertising which could give the stock a boost in the coming weeks. Currently, the stock is trading at CAD 0.52, giving it a market capitalization of just CAD 19.4 million. Too low in view of the high gold discoveries. If the first resource calculation can be presented this year, this should be the final turning point.
Alibaba - Crash exaggerated?
On October 24, shares of almost all Chinese stocks plunged after Chinese President Xi Jinping was re-elected for a third term. This also affected Alibaba stock, which has been suffering from Chinese government clampdowns for some time. Yet China's economy grew at a surprisingly strong 3.9% in the third quarter. However, experts fear that China is preparing for a war against Taiwan with the personnel changes in the government. Should this happen, it would be devastating for Alibaba shareholders. It would likely lead to scenarios similar to those at Gazprom.
Is Alibaba a Buy? The recent discount seems exaggerated. The growth company is making money and has almost completely penetrated the enormous Chinese market. Book value per share is USD 54.26 as of June 30, 2022, slightly below the current market value of USD 63.22. From a fundamental point of view, the share is a bargain and is now trading below the 2014 IPO price. Any bad news is currently priced in, and any improvement, however small, will cause the share to climb again.
If the Zero-COVID policy is relaxed, China's consumer climate will brighten considerably. The stock has enormous upside potential as long as no war is waged against Taiwan. The upcoming quarterly figures, which are scheduled for mid-November, will be important. Analysts already agree that the share is a buy. 40 analysts have price targets between USD 75 and USD 216. On average, the price target is USD 136.34 and therefore, the share has the chance to more than double.
There is a lot going on in the markets at the moment. Energy prices are falling, the reporting season in the US is in the hot phase, and the elections are coming up soon. At BASF, the high natural gas prices have spoiled the latest quarterly figures. However, with prices currently falling, things could improve as early as the fourth quarter. Tocvan Ventures has two exciting projects with high gold and silver deposits. A major marketing offensive is now starting, which could revive the stock. Alibaba is fundamentally undervalued, but fear of the Chinese government plays a role here. Risk-conscious investors can take advantage of this opportunity.
Conflict of interest
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