01. December 2020 | 10:23 CET
BP, Triumph Gold, K+S - who offers the best trading opportunities?
The asset class "commodities" offers investors a broad and exciting investment universe. Especially the high cyclicality of commodity prices provides opportunities. When Gold & Co is in fashion, stocks that operate in this field often develop explosively. But also, commodities that are not among the favorites of investors at times, or are subject to strong fluctuations, such as oil & gas or potash, offer good (countercyclical) investment and trading opportunities.
time to read: 3 minutes by Carsten Mainitz
BP PLC - 30% price increase in the last weeks, use volatility for trading
The price of oil has gone off the rails this year. The supply and demand situation is difficult to assess given the fear of recession and the power games of significant players. The volatility was partly absurd.
It is therefore hardly surprising that large oil companies are among the worst money destroyers in 2020. The share price charts were correspondingly positive. In recent weeks, however, the sentiment of the oil industry has also improved in the course of the generally good stock market phase. The BP share gained 30% last month. The payment of a dividend and even the continued adherence to payouts may seem like a marginal note, but it is not, given the disastrous figures. All because BP is demonstrating financial strength and sending a clear signal that it can successfully adapt structures and costs through a transformation process.
In the first nine months of the financial year, the industry heavyweight posted a loss of no less than USD 21.7 billion, compared with a profit of USD 4 billion a year earlier. But the worst is probably behind the shareholders because the terrible loss stems mainly from Q2. The third quarter was "only" in the red with USD 450 million. Nevertheless, it may be too early to give the all-clear. For the disagreement within the oil network, Opec+ over an extension of production cuts is causing dark clouds to gather again. No reason for bad mood though - volatile stock market phases are full of trading opportunities.
TRIUMPH GOLD CORP - bet on the further rise of gold and copper
Gold is the best-known crisis currency. We have seen this impressively in recent months. Even though the price of the precious metal has recently fallen, experts agree that the price can only rise in the medium term. For a completely different reason, the industrial metal, copper, has developed strongly this year. The forecast demand in the wake of electromobility suggests that the gap between supply and demand will diverge significantly in the future. It is certainly not a bad idea to position oneself in the two raw materials.
With shares in Triumph Gold, investors can do just that. Triumph Gold Corp is a mineral exploration Company currently focused on its 100% owned Freegold Mountain project in the Yukon. The property is located in the gold-copper belt of the Dawson Range, where the Casino copper deposit, the Coffee gold deposit and the Klaza gold prospect, are also located.
The Vancouver-based Company currently has a market capitalization of CAD 25 million. The stock has lost approximately 50% over the summer and now offers an attractive level for (post) purchases.
K+S AG - Commerzbank sees further price potential of 30%
In recent weeks, the price of the K+S share has experienced a rollercoaster ride. After a long dry spell, the share finally appeared to be heading for liberation in mid-October with the announcement that it intended to sell its salt business in North and South America. However, the share price quickly retreated from the price level of over EUR 7 and corrected to EUR 5.66.
Today, the share is 2 euros higher again. What are the reasons? Several analysts have now issued price targets of over EUR 7. Commerzbank stood out particularly positively last Friday. The Coba analyst upgraded K+S from "hold" to "buy" and increased the target price from EUR 7 to EUR 10! The expert cited as reasons, the unexpectedly high proceeds expected from the sale of the American salt business, a significant reduction in balance sheet risks after write-downs, and a positive outlook.
As already mentioned, volatility offers trading opportunities.