07. April 2021 | 09:30 CET
BYD, Kodiak Copper, Varta - Buying rate?
Electromobility, energy and digitalization are continuing as a trend. Even if some prices have run hot in the meantime, the current price consolidation offers tempting entry opportunities. With the three shares presented, investors can bet on different facets of the trend. Which stock offers the most significant potential?
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ISIN: CNE100000296 , CA50012K1066 , DE000A0TGJ55
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
BYD CO LTD - Outlook has disappointed
Chinese electric car and battery developer BYD Company released an outlook for its first-quarter numbers at the end of March. Net income attributable to BYD shareholders is expected to be between 200 million and 300 million yuan in Q1, representing an increase of up to 166% year-on-year. Although the numbers were above market estimates, the stock did not take off as there was a point or two in the outlook that bothered it. However, after such a brilliant share price development as in the last few months, this is also something to get over.
Much more important are the intact general conditions, which enable further growth. BYD reports a solid economic development in the People's Republic. The new flagship model "Han" is selling well. Nevertheless, this "good" was not what analysts had expected. Currently, the Group produces 30,000 units per month, while the monthly sales figures for the Han model were only 10,000. This prompted some analysts to lower the price target. On average, the experts continue to see encouraging upside potential.
BYD has established itself as one of the leading manufacturers of New Energy Vehicles (NEVs) worldwide with an extensive product range. Very roughly speaking, the Group is well positioned in industries related to electronics, automobiles and renewable energies. The long-term prospects are right. I am sure major shareholder Warren Buffet agrees.
KODIAK COPPER CORP - Repeat offender
The Canadian copper explorer Kodiak Copper is a prime example of how the "people" or "team" factor is decisive for young commodity companies, in addition to financial resources and project quality. In Kodiak's case, the "success factor" is Chris Taylor. Taylor has been internationally known since the gold discovery with Great Bear Resources. The stock shot from a few cents to more than CAD 10 within a few years. Taylor is Chairman at Kodiak. The Company's CEO is industry veteran Claudia Tornquist.
In the wake of a sharp rise in copper prices and a vast discovery of copper at the MPD gold project, share prices rose to as high as CAD 3.20 last year. The potential of the MPD project convinced industry giant Teck Resources to enter Kodiak - an accolade. A 30,000m drill program is fully funded and was already underway by mid-March.
With the resulting newsflow, the share price should move significantly upwards again. The share has corrected considerably from the highs in the year with a current level, at CAD 1.45, the market capitalization is around CAD 67 million. Analysts see a considerable price potential and certify the share on average an Upside of up to CAD 2.40! Even if all eyes are currently on the MPD project, one should not forget the other project Kodiak holds in its portfolio - the Mohave copper-molybdenum-silver porphyry project in Arizona. Nearby is the world-class Bagdad mine, owned by Freeport-McMoRan. There is much to suggest that Chairman Chris Taylor is proving to be a "repeat offender." Those who have not yet jumped in should do so at the favorable price level.
VARTA AG - Standby
Following the announcement of record figures for the past fiscal year and the entry into the production of large-format battery cells, the Varta share has become somewhat lethargic. Both company announcements could not lift the share certificates to a sustainably higher price level. Those involved for a long time have made nice profits and can wait patiently until the share leaves standby mode again.
At present, it is not clear where a new impetus for the share is to come from. Perhaps it will be the figures for the first quarter, which the Company will publish on May 12. Shareholders' meetings are often an occasion where management reports on the past fiscal year and looks to the future. On June 18, Varta invites you to the shareholders' meeting in Ellwangen. Shareholders can look forward to a distribution (incl. special distribution) of EUR 2.50 per share.
Meanwhile, there is also little to be heard from the analysts' guild. There are no more buy recommendations. The majority of experts rate the share as "hold" or "reduce." Given the sporty valuation with a P/E ratio of over 30 and a price-turnover ratio of over 5, the Company, which is worth a good EUR 5 billion, is no bargain. From a chart perspective, no momentum can be identified in the short term. To generate a buy signal, the share must overcome the EUR 137 mark. The support zone is roughly in the area of EUR 105.