June 21st, 2021 | 11:25 CEST
BYD, QMines, Varta: Investors must now think outside the box
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"[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel
BYD: What investors can do now
The BYD share is one of the comeback stocks of the past week. The Chinese e-car specialist is experiencing renewed popularity both on the stock market and among potential customers. There are rumors on the market that sales figures could rise once again due to economic recovery. That would be good news for BYD. The Company is already very well positioned to play a significant role in the distant future: In addition to its battery production, BYD also offers a chip division. These chips, in particular, have been scarce in recent weeks and months and brought many a carmaker to its capacity limit - for BYD, such problems do not appear.
In addition to the good supply of batteries and chips, the Company benefits twice and wants to list its two divisions separately. The advantages: The IPOs flush capital into the coffers and at the same time make it possible for battery production and also chip manufacture to open up even more to other customers. The parent Company BYD would then also benefit from the associated economies of scale.
The share is heading for an all-time high and seems unstoppable. However, a rise would have made more sense a few weeks ago. Now investors should better only cautiously build positions waiting for good opportunities.
QMines: Copper and gold with a sustainability concept
While stocks like BYD are attracting the attention of many investors, cautious investors better think a little outside the box. Shares of Australia's QMines could also be in greater demand as the popularity of e-car stocks grows. QMines only went public in Australia in May. The Company is pursuing its flagship Mount Chalmers project, exploring for copper and gold. The mine was already in production and then shut down in 1982. With today's processes, the team around QMines believes it has great potential and is pushing ahead with exploration. Initial results from a 1,575 meter drill program have already revealed 0.75 meters of 13.4% copper and 6.11 g/t gold.
What is unique about QMines is their approach to operate in a CO2-neutral manner. Climate-neutral raw material projects are particularly in demand when they are part of supply chains for the e-auto industry. Car manufacturers are responding to customers' increasing awareness of supply chains and sustainable raw material extraction. Although QMines is at the beginning of development, the Company is also valued correspondingly low - QMines is currently worth only around EUR 24 million on the stock exchange.
While such valuations suggest that a share has a speculative character, they also offer the chance of attractive returns with only a small capital investment. QMines could still reach top form in the slipstream of the e-car boom.
Varta: What is coming from 2022?
The share of German battery manufacturer Varta has also benefited from the market environment surrounding electromobility. However, the share price performance also shows how skeptical the market now is about the Company. Varta wants to start test production of batteries for electric cars at the end of 2021. Since Varta has excellent know-how and has scored with its batteries and rechargeable batteries on the market so far, this is also a good idea. But the competition for batteries for electric cars is fierce - especially from the Asian market. Therefore, it is not yet clear to what extent Varta's plans will be a success. For this reason, investors are also taking a wait-and-see approach.
Those who want to invest in electromobility have several options. Both direct and indirect opportunities are emerging. Companies like BYD are well positioned but are also already expensive. It is also not clear how the brands can prevail against established manufacturers. In the case of Varta, too, it is by no means clear yet whether the Company is on the road to success. The same applies to the mine developer QMines. However, the latter company scores with a low valuation and a less complex investment story: If the high copper and gold contents are confirmed, QMines is perfectly positioned in the mining country Australia. In addition, there is the ESG approach. For investors, it can be worthwhile to think outside the box when it comes to e-car investments.
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