11. June 2021 | 08:05 CET
BP, Royal Helium, Gazprom - Boosters for the Portfolio
Inflation is here. In the USA 4.2%, in Germany 2.5%. Meanwhile, it may be doubted that these values are of a short-term nature. Commodity prices have been rising for some time, and some craftsmen in Germany are switching to short-time work because they can no longer obtain materials or only at horrendous prices. Inflation means nothing else than a loss of value of money. So, where is the best place to invest at the moment? Dividends would be nice; ideally, more than 3% and additional price gains in stocks would be even nicer. We have picked out three stocks that we think are suitable inflation protectors.
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ISIN: GB0007980591 , CA78029U2056 , US3682872078
"[...] We expect the first three wells to be drilled, cased, completed and tested by the second week of March [...]" Andrew Davidson, CEO, Royal Helium Limited
BP - A good year ahead
When the ruling against Shell was handed down on May 26, the big question was how it would affect the other oil giants. For shareholders, it was clear, almost not at all - the share price went down only marginally. Nonetheless, the ruling is likely to have long-term consequences, as Shell may be forced to close oil wells to meet targets. As a result, this means that supply will become tighter, which usually leads to higher prices. The current oil price, which is already performing strongly, will give BP a tidy profit this year, even though BP has not officially considered itself an oil company since 2020.
CEO Looney even expects that the oil demand will recover strongly and that this picture will last longer. On Wednesday, BP announced that it will supply 800,000 tons of natural gas per year to Pavilion Energy Trading and Supply in Singapore starting in 2024. Highlighted was the collaboration between the two companies to develop a methodology for quantifying greenhouse gases to increase transparency. So BP is trying to improve significantly in terms of sustainability.
The share is currently trying to break through its March high of EUR 3.79; if it succeeds, the next resistance would be EUR 4.25. The dividend yield is around 5%, which is quite attractive. If you assume that the oil price will continue to rise, you are well-positioned with BP, even if you have to expect setbacks, because oil is currently a red flag for many. Nevertheless, the world will depend on it in the long run.
Royal Helium - On the verge of production
Royal Helium owns a 400,000-hectare area in Saskatchewan, Canada, and wants to become a recognized helium producer. The chances for this are now excellent. Already the first 3 drillings in the so-called Climax project were total hits. Pilot production was started and successfully implemented. The infrastructure in the area is excellent due to the oil and gas deposits.
Relying on helium brings several advantages. First, as with many commodities, the price is rising and the supply is dwindling as the old production sites produce less and less. In addition, helium is not replaceable and demand is steadily increasing. The range of applications goes far beyond balloons. It is increasingly used in high-tech areas such as space technology, chip production, medical technology, cryogenic technology, or shielding gas in welding work.
The Company completed a CAD 17.25 million financing on June 8 by issuing 34.5 million shares, which will enable Royal Helium to move more quickly towards its goals. It is now possible to start production and explore other areas of interest. The cash flow generated by the production and sale of helium can be invested in the Company's development. Project Climax 1 is already in production planning and the other two discoveries will surely follow soon. Management estimates reserves between 2.5 and 6 billion cubic feet of helium.
Since the US will completely privatize its US Federal Helium Reserve later this year, the US will also be purchasing helium again. The routes from Canada to the US are short and US consumption of helium is 25% of world demand. Royal Helium's share price has dropped somewhat with the announcement of the new share issue and is currently trading at around CAD 0.60. Once production starts and the first figures are available, the price can quickly move upwards again.
Gazprom - Nord Stream 2 nears completion
Gazprom, the world's largest natural gas producer, has been riding a wave of success since the beginning of the year. The Company is currently benefiting from the fact that many supply contracts are linked to the oil price, and the oil price is still on the upswing. There is currently no end in sight. Business is also excellent in Asia.
However, the focus is on the Nord Stream 2 gas pipeline, one section of which has already been completed according to President Putin. The construction of the second line is also expected to be completed within 2 months. So it is safe to assume that the pipeline will certainly be completed this year. The Russian Company then wants to deliver 55 billion cubic meters of gas to Germany through the pipeline, thus saving transit costs through Ukraine.
Gazprom Neft is also an oil-producing subsidiary that benefits directly from the rising oil price. The Gazprom share currently looks overbought for the time being. Nevertheless, the fundamentals are still good. A price-earnings ratio of 4 is very low compared to the sector. In addition, as an investor, one benefits from a good operating result in the form of a dividend.