February 9th, 2023 | 19:54 CET
Comeback opportunity or a complete washout? These facts decide: Deutsche Bank, K+S, Tocvan Ventures
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"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
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.
Deutsche Bank: This is the predicament
Deutsche Bank's stock has been in the headlines lately. The latest quarterly figures were less good than expected. Even discussions about a share buyback program could not boost the share again. The reason: Analysts had speculated that the shape of the price of cosmetics could be in danger this year. At the same time, media reports about high derivative holdings around precious metals in the balance sheets of US banks are doing the rounds. Also, the bank supervisors of the European Central Bank warned banks on Tuesday to be careful. The risks in connection with the Ukraine war are not yet off the table. Banks should therefore focus on precautionary measures. So is the banking crisis back?
Instead of waiting for black swans as an investor, it is better to look at the interest rate environment in connection with banks. Central banks in major currency areas have recently taken smaller interest rate steps. An interest rate pause in the second quarter seems possible, and even interest rate cuts are conceivable again from 2024. Exogenous shocks could trigger interest rate cuts, but a latent risk of recession - provided inflation has been reliably averted by then - could also provide grounds for consistent action by central banks. In either scenario, bank shares could come under pressure: A recession weighs on the lending business, and falling interest rates also shrink the scope for banks. After six successful months, Deutsche Bank shareholders can slowly but surely return to a focus on protecting their profits.
Tocvan Ventures: Financed gold prospector with cost advantages
Hedging can also be the focus of the shares of Tocvan Ventures - although the term initially seems inappropriate in connection with the smallcap from Canada. Tocvan Ventures operates two promising gold projects in northern Mexico, Pilar and El Picacho. The region is particularly popular for its low-cost heap leach process. This process allows even smaller deposits to be exploited profitably. In general, the Company, in the person of CEO Brodie Sutherland, emphasizes the good general conditions: "The costs for exploration are also significantly lower. For example, we pay around CAD 50 per meter for drilling. Elsewhere, this amount is significantly higher. The bottom line is that our costs are about 25% lower than in other well-known mining regions," the manager said in an interview last summer.
At that time, in addition to encouraging drilling results, Tocvan Ventures also made a splash with the entry of investor Sorbie Bornholm. The investment secures the Company's financing until 2024 and allows the Company to focus on its core task of exploration. Sorbie Bornholm is known for its strategic support of projects and has, in the past, gradually increased its involvement in companies. The shares of Tocvan Ventures are a flawless small cap with a market capitalization of only CAD 22.6 million. The charm of two promising gold projects, of which El Picacho is very similar to the nearby San Francisco mine, could make the stock attractive as an addition and for investors in turbulent times.
K+S: New record prices quesitonable
Two years ago, the K+S share was also considered exciting - inflation was in the starting blocks and K+S anticipated this development. Today, the share has already experienced a positive development. Although analysts have recently raised their expectations again, the potential appears limited despite good underlying conditions. The business is considered cyclical. Weaknesses in the upcoming quarterly figures could make investors sit up and take notice. As K+S has recently broadened its supply chains, risks in connection with the Ukraine war should be lower today. However, it seems questionable whether the share will reach record prices again.
The gears are sputtering at both Deutsche Bank and K+S. The former profiteers of inflation and the interest rate turnaround have to face the new realities. Higher valuation levels also make further price gains seem less likely. As a small cap, the Tocvan Ventures share is not without risk, but the external factors here are almost exclusively limited to financing risk. Thanks to investor Sorbie Bornholm, the Company is financed until mid-2024. Operationally, there is room for surprises.
Conflict of interest
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