08. December 2020 | 08:59 CET
Cisco Systems, BASF, Defense Metals - Everyone is extremely important!
Current advances in technology are changing the industry forever. It is the data worlds that play an increasingly important role in all stages of the production process today due to their availability and analytical capabilities. They make operational activities more transparent and much easier to control. Production data is automatically matched with supply chains and the resulting end products. In this context, digitization has a healing and destructive component. Healing, because the understanding of the process is getting better and better, and all eventualities can be mapped. Destructive, because it has a damaging effect on routine activities that were historically performed by a large number of people and will be increasingly dispensable in the future. In the field of cybersecurity, numerous investigations are conducted, thousands of vulnerabilities are identified, and forensic tools are developed to help protect corporate assets. A new era has begun - complete transparency is the order of the day!
time to read: 4 minutes by André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Cisco Systems - The network Company
Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol-based networking solutions and also provides comprehensive services and other products related to communications and information technology. The Company is a pioneer in the field of data transmission, network configuration, Internet connection, and the combination of voice and video within complete company divisions, across locations and worldwide.
Cisco Systems has been on a stable growth path for a good two decades, with smaller additions being purchased on the market every year. Yesterday IMImobile, a British manufacturer of customer service software which will be bought for GBP 543 million, was one of them. This transaction is the largest for Cisco in the UK since 2018, and the UK Company's share price is going through the roof with a 47% increase. The news came as a surprise to the market as IMImobile's share price has been trending sideways and downwards for the last 3 months. The provider of cloud communications software has already agreed to Cisco Systems' takeover bid, and the Company seems to be feeling very comfortable with the NASDAQ Titan.
Cisco has already received irrevocable commitments for 25.8 million shares, representing approximately 31% of IMI's share capital. IMImobile also announced its interim results, which showed a sharp increase in profits from GBP 1.3 million last year to GBP 3.5 million over the previous six months. The market capitalization of Cisco itself is currently USD 187.5 billion. Since the 1980s, complementary companies and providers of new technologies have been bought up, with money or their own shares - a prevalent expansion strategy. In the last 10 years, Cisco has risen by about 133%, making it one of the more comfortable stocks on the NASDAQ.
BASF - From the dark depths back to the light
BASF has been a rock in the surf of the DAX standard stocks for years. The "Baden aniline", as it is also called in stock market jargon, is very cyclical, which is why it is always sold out during economic downturns. In March, the price fell to a 10-year low of around EUR 40.00. Long-term oriented investors should not worry about the Company's recent net losses caused by non-cash impairments due to Covid-19. For the last quarter, non-cash impairment charges amounted to EUR 2.8 billion, which helped turn net profit into a loss of EUR 2.1 billion. However, a recent free cash flow analysis indicates a potential FCF return of 6.5%, a solid analytical figure.
To keep the group in the wind in the long term, the chemical group is once again restructuring a small amount. Yesterday it was announced that its subsidiary, Colors & Effects, which specializes in colour pigments, may be sold to the Japanese Company DIC subject to conditions. According to a decision by the EU competition authorities on Monday, the merger is subject to the condition that DIC's main production facility for pigments must be sold to competitors. It is operated by DIC's subsidiary Sun Chemical in South Carolina (USA). It's a good thing that the guardians of competition always do the math with a sharp pencil!
In its current line-up, BASF SE has a market value of EUR 56 billion and has increased its share price by a good 50% since its low in March 2020. Chart wise it is a Company to hold on to as it approaches its 52-week high. On top of that, there is a solid dividend of 5% for the patient in April/May 2021.
Defense Metals - Strategically immensely important
Defense Metals Corp. is an explorer focused on rare metals. The topic has become a key issue on the industrial procurement side in recent years. Entire branches of technology increasingly depend on the secured supply of rare raw materials. Future technologies such as green energy technology, fuel cells, seawater desalination, high-temperature superconductors or new technical alloys stand and fall with the availability of rare metals such as palladium, selenium, cerium or niobium. The western industrial nations are today almost wholly dependent on the import of rare earths
In the past, there have been extreme price movements for many rare raw materials. In the course of the strong global economy at the turn of the millennium, prices initially rose continuously until 2007, but then fell massively in the following financial crisis from 2008 onwards. Now, with the limitations of COVID-19, a shortage problem is emerging again, and the situation is extremely tense. The worldwide nervous reaction shows this as an announcement by China stated that it would no longer be able to satisfy the demand for the scarce metals indium and germanium in the future - the reason: domestic demand!
Defense Metals could offer a solution for the industry as it has an option to acquire 100% of the 1,708-hectare Wicheeda rare earth property near the Canadian city of Prince George. Jamie Spratt has now been appointed as the Company's strategic advisor to assist in the future strategy for dealing with the many demands. He is a Principal at Walmsley Capital Inc, a Company specializing in corporate finance in the mining sector, which he himself founded in 2019. Over the past 14 years, he has gained extensive experience in the mining investment sector and has advised on major deals. The Company currently has a capitalization of only CAD 10.8 million at a price of CAD 0.20 per share. The price has already tripled since March 2020 and remains promising.