Between the Commodity Rally and Brand Crisis: Almonty, Broadcom and Lululemon in Focus

Almonty Industries: Sangdong is Now Key

The stock market story of Almonty Industries was long a bet on the future. It is now also beginning to bear operational fruit. In Sangdong, South Korea, the commodities specialist has completed the first phase of expansion at its promising tungsten mine and began processing previously mined ore in June. This marks the decisive transition: a development project spanning many years can now become a sustainable source of revenue and cash flow.

The timing could hardly be more favourable. Tungsten has the highest melting point of any element, is extremely hard and virtually irreplaceable. Around 55-60% of demand comes from cemented carbides and industrial tools. Added to this are applications in defence and aerospace, semiconductors, medical technology and energy technology. China controls around 80% of global production and more than 90% of further processing. At the same time, restrictions on tungsten from China, Russia, Iran and North Korea for military procurement will come into force in the US from early 2027. Western customers therefore urgently need alternative supply chains.

This is where Sangdong comes into play. The first phase of expansion is designed for an annual throughput of 640,000 tonnes of ore and around 2,300 tonnes of tungsten concentrate. In the second phase, capacity is set to almost double to 1.2 million tonnes of ore and approximately 4,600 tonnes of concentrate. Once fully operational, Sangdong could meet around 40% of the demand for tungsten outside China. The mine's expected lifespan is more than 45 years.

A buffer is already in place for the ramp-up. At the end of June, Almonty had around 139,700 tonnes of pre-produced ore with an average grade of approximately 0.25% tungsten trioxide. This corresponds to approximately 2.6 months' capacity utilization at the first stage of development. The company estimated the calculated gross value of the contained tungsten at around USD 68 million based on prices at the time. Initially, lower-grade material will be processed deliberately in order to optimize the plant, the mix and the yield. The real litmus test is therefore not the first plant run, but stable operation with the planned yields and concentrate qualities.

The sales risk is comparatively low. A contract with Global Tungsten & Powders, extended to 21 years, covers around 90% of the planned production for the first phase of expansion. Minimum prices protect the margin during weaker market phases. Thanks to higher volumes and better terms, the expected annual contract revenue is set to rise by at least USD 30 million and, at current prices, reach up to USD 490 million. Potential Phase II production is not yet included in this contract, meaning Almonty retains considerable additional upside for price and sales growth here.

However, Sangdong is merely the core of a larger platform. The long-established Panasqueira mine in Portugal supplies particularly pure concentrate and is set to grow to an annual throughput of 800,000 tonnes following its expansion to Level 4. With Browns Lake in Montana, Almonty is also establishing a direct US presence. Added to this are the planned resumption of processing of old tailings at Los Santos, a molybdenum project beneath the Sangdong tungsten zones, and a planned plant for 4,000 tonnes of nano-tungsten oxide per year in South Korea. For the latter, there is a financing commitment from KfW IPEX-Bank for up to USD 50 million. This would enable Almonty to take on part of the lucrative further processing itself.

Following the placement of an oversubscribed convertible senior notes offering worth USD 800 million, CAD 1.23 billion was in the company's coffers at the end of June. In the following video, "Almonty Industries: The USD 800 Million Bet on Tungsten", CEO Lewis Black explains how the new financial leeway is to be utilized. In addition to the ramp-up and expansion of Sangdong, the focus is on expanding the Panasqueira mine in Portugal, the Gentung project in Montana, and possible further strategic assets. At the same time, Black puts the USD 800 million convertible senior notes offering and the geopolitical race for a tungsten supply independent of China into context.

https://youtu.be/H89AmF0rjfA

The management sent a confident signal in mid-August. Through August 2029, up to 14.4 million own shares, just under 5% of the share capital, may be repurchased for a maximum of USD 300 million. However, the program is an authorization, not an obligation to buy. The scale will depend on the share price, liquidity and capital requirements.

In a recent report, analysts at Jefferies forecast a jump in Almonty's revenue for the current year from USD 33 million to USD 270 million. According to their estimates, revenue of USD 742 million is possible in 2027, rising to USD 1.085 billion in 2028. Earnings per share are expected to rise from USD 0.45 in 2026 to USD 1.40 in 2027 and USD 2.20 in 2028. Jefferies sets the target price at USD 26.25, representing upside potential of just under 50%.

The key factors now are the smooth ramp-up of Sangdong, the financing and the timetable for Phase II. However, following the share price rally of the past 2 years, Almonty is no longer an undiscovered explorer. The story remains strong, but the share is fundamentally only suitable for risk-tolerant investors. If operations get off to a sustainable start with the ramp-up at Sangdong, Almonty's shares still have significant upside potential for further price gains.

Broadcom: Record Numbers Are No Longer Enough

Broadcom demonstrates just how high the bar has now been set in the AI sector. The US company develops custom AI chips and the associated network technology for heavyweights such as Google, Meta, Microsoft, Anthropic and OpenAI. The major technology companies in particular are looking for alternatives to Nvidia to cut costs and reduce their dependence on the market leader.

The latest figures show just how dynamic the business is. In the third financial quarter, revenue soared by 86% to USD 29.6 billion. Adjusted earnings per share nearly doubled to USD 3.32, while free cash flow reached USD 13.7 billion. The business remains centred on bespoke AI accelerators and networking technology: revenue from AI semiconductors jumped by 221% to USD 16.7 billion. For the final quarter, CEO Hock Tan is already forecasting USD 21.7 billion.

Even more impressive are the medium-term targets. In the current financial year, AI revenue is set to reach USD 58 billion. For 2026/27, Broadcom is already targeting USD 115 billion, rising to USD 230 billion the following year. Tan has also set the bar high for profits: by 2027/28, adjusted earnings per share are set to rise to USD 30. In the previous financial year, the figure was just under USD 7. This forecast exceeded analysts' previous expectations. Nevertheless, the share price reacted only modestly to the figures. For the fourth quarter, Broadcom also forecast total revenue of USD 34.8 billion – slightly less than particularly optimistic investors had hoped for. That is the luxury problem of a stock market star: even record figures hardly come as a surprise anymore.

However, the dip could prove to be an opportunity for interested newcomers. In addition to its AI chips, Broadcom has a highly profitable software business and is establishing itself as the leading alternative to Nvidia. Analysts also remain extremely optimistic: 57 out of 62 experts tracked by Bloomberg recommend buying the shares. The average price target of just under USD 530 is well above the current level and exceeds the previous record high.

The valuation remains ambitious, but if Broadcom meets or even exceeds its profit targets, the recent price weakness presents an interesting buying opportunity.

Lululemon: Cheap Does Not Automatically Mean Good Value

With Lululemon, the trend is heading in the opposite direction, with the yoga mat turning into a slippery slope. The former stock market darling has once again disappointed with its latest quarterly figures and has slashed its full-year outlook sharply. Revenue fell by around 4% to USD 2.4 billion. Particularly painful is the weakness in its key market, the US, where revenue declined by 8%. Even China, long a reliable driver of growth, failed to provide any relief this time: on a currency-adjusted basis, sales there fell by 2%. The problem can therefore hardly be attributed solely to a regional slump in consumer spending.

Above all, the brand's core product range is faltering. Lululemon's leggings sales fell by around 20%. These tight-fitting pants made the Canadian sportswear retailer a success, but customers are now increasingly opting for looser fits.

New products have so far failed to offset the decline. At the same time, younger competitors such as Alo Yoga and Vuori are putting pressure on the market leader. Lululemon must prove it can continue to set trends. High prices can only be sustained in the long term if customers recognize corresponding added value.

The new full-year outlook shows just how deep the problems have become. For 2026, management now expects revenue of just USD 10.35 to 10.50 billion, having previously targeted USD 11.00 to 11.15 billion. The forecast for earnings per share has been scaled back from USD 10.95-11.15 to USD 9.48-9.73. The stock market reacted with a share price plunge of just over 17% to USD 100.61.

Based on the new profit margin, this results in a P/E ratio of around 10.5. At first glance, this looks attractive for a well-known brand manufacturer. However, this calculation only holds if profits actually stabilize. Further downward revisions to forecasts could quickly put this supposed bargain into perspective. A lower P/E ratio alone therefore does not yet provide a convincing reason to buy.

The imminent change in leadership offers cause for hope. On September 8, former Nike executive Heidi O'Neill will take the helm. Her task is clear: the product range must become more desirable again, and the brand must raise its profile. This requires products that win back customers and sell over the counter without the need for significant discounts.

This makes Lululemon an attractive prospect for contrarian investors. A successful turnaround could boost both profits and the valuation. However, operational proof is still lacking. The fallen stock market star certainly belongs on the watchlist. Stable sales and a resilient outlook would be better arguments for an entry than the gap to previous all-time highs.

Almonty offers the greatest upside potential, but of the three stocks presented, it also carries the highest risks. If the ramp-up at Sangdong succeeds, revenue, earnings, and cash flow could move into a whole new dimension. Broadcom is already delivering at the highest level, but given the lofty expectations, it must continue setting new records. Lululemon may look cheap on the surface, but it needs to provide evidence of a turnaround first. Our favourite for risk-tolerant investors remains Almonty – although any entry should be made in stages, preferably on weaker trading days.