February 24th, 2021 | 08:55 CET
BYD, dynaCERT, Plug Power: Three shares for the next five years
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"[...] We can convert buses and trucks to be completely climate neutral. In doing so, we take a modular and incremental approach. That means we can work with all current vehicle types and respond to new technology and innovation [...]" Dirk Graszt, CEO, Clean Logistics SE
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.
BYD: Is there an opportunity in this correction?
The electric car manufacturer BYD has undergone rapid development. What started as a battery manufacturer, the Chinese turned their cost advantages into a comprehensive business model and are now considered an e-car manufacturer. In addition to cars, the Company also manufactures trucks and buses. Besides pure electric motors, BYD also offers hybrids and still has a battery division. However, this could soon be spun off. BYD wants to become a pure car manufacturer and at the same time offer the batteries of its subsidiary to other car manufacturers. The ulterior motive is that even larger quantities will reduce unit costs and thus also benefit BYD itself.
In recent years, BYD has developed into a relatively self-sufficient company and manages without many suppliers. As a result, a large part of the value creation remains with the Chinese. For shareholders, the BYD share is a promising stock from a strategic point of view. Since China also controls large parts of the critical metal production for e-mobility, the Chinese Company is in a good position. The stock is costly, with a price-earnings ratio (P/E) of around 100 due to the growth perspective and the market environment. The share has corrected by approximately 12% in the last five days. Those who take a long-term view can use such corrections to their advantage.
dynaCERT: Converting to green and collecting emission rights
One Company whose future technology could easily be used today is dynaCERT. The Canadians have set themselves the goal of making existing diesel engines cleaner. To this end, dynaCERT offers a patented hydrogen-based electrolysis system that can significantly reduce fuel consumption and emissions. Specifically, there is talk of around 19% less emissions. dynaCERT targets larger vehicles, such as buses or heavy machinery - for example, in the mining industry. Since the Company also offers telematics software that can measure and report CO2 savings, an additional market is emerging. Companies, in particular, are increasingly adopting ESG criteria. Those who save CO2 score points with investors and can even turn acquired emission rights into cash.
The dynaCERT share experienced a hype phase after the turn of the year. At that time, analysts at Haywood named the stock their sustainability top pick. The price target at that time: CAD 2.20. Today, the price is hovering around CAD 0.70. Time and again, the value shows strength but does not get going. The market is waiting for dynaCERT to announce a larger order. Only recently, dynaCERT concluded a cooperation agreement, which gives hope in this regard. However, nothing is concrete yet. Should the Company bring its technology to customers on a large scale, the stock should have potential. While the market generally looks far into the future, transitional technologies are ignored. For investors who don't want to buy "charting flagpoles," dynaCERT is a latecomer opportunity.
Plug Power: More of a bet than an investment
Hydrogen stock Plug Power was also bet high by many investors - but then came the crash. The value fell by around 30% in the last month. Nevertheless, on a one-year view, a return of 680% is still on the price list. Plug Power received a capital injection a few weeks ago from the US bank Morgan Stanley, which bought shares at a price of around USD 2 billion to ultimately pass them on to investors. Such a move is considered a vote of confidence - only when the stock is worth more than USD 65 does Morgan Stanley also make its cut. At USD 48, however, the share is still a long way from that.
Those who are convinced of the fuel cell manufacturer's concept can now get in at a lower price than the US bank. However, the price jumps also show that there is a lot of speculation in the value. Hydrogen stocks remain a bet on the future - unlike electric cars and internal combustion engines, the technology is not yet on the road. Investors should be aware of this. BYD and especially dynaCERT, which has received little attention from the market, could be considered less susceptible to price losses.
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