July 22nd, 2025 | 07:20 CEST
Defense hype, high-tech hope, valuation question: RENK, Salzgitter, and Argo Graphene Solutions
Three shares, three stories – ranging from high-tech hopes to defense-driven fantasy to valuation concerns. Argo Graphene Solutions is bringing the "miracle material" graphene to the construction industry. The stock is on an upward trend. If the rollout is successful, a multi-fold increase is possible. At Salzgitter, hopes for a revaluation based on defense fantasies evaporated after a sharp forecast cut; however, the price loss may have been excessive. And RENK? The defense supplier remains in demand, but valuation concerns are growing. Where is it still worth getting in?
time to read: 4 minutes
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Author:
Fabian Lorenz
ISIN:
RENK AG O.N. | DE000RENK730 , SALZGITTER AG O.N. | DE0006202005 , ARGO GRAPHENE SOLUTIONS CORP | CA04021P1018
Table of contents:
Author
Fabian Lorenz
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
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Argo Graphene Solutions: Shares on an upward trend
Graphene – can this material revolutionize the construction of roads and buildings? The experts at Argo Graphene Solutions are convinced it can. They are fully committed to the opportunities offered by mixing graphene into concrete and asphalt. To this end, they recently even changed the Company name from Argo Living Soils.
This is how the revolution is supposed to look: mixing graphene into concrete and asphalt to improve stability, increase earthquake resistance, and reduce the volume required, among other things. And these are just two of a multitude of innovative possibilities. Graphene is a nanomaterial made of carbon. Due to its lightness and near transparency, it is often referred to as a "miracle material." Although it is only one atom thick, it is over 100 times stronger than steel and electrically conductive. It is already being used in electronics, energy storage, sensor technology, and biomedicine.
In addition to research, Argo Graphene Solutions is already preparing for rollout. To this end, a 2,000-square-foot distribution and mixing center was recently opened near the port of New Orleans. There, specially developed formulations for concrete, cement, and asphalt are mixed and can be tailored to project-specific requirements.
Landry Construction is a cooperation partner at the new location. Its Founder and President, Wilbert J. Landry Jr., was recently appointed to Argo Graphene's board of directors. He has over four decades of experience in the construction and real estate industries, making him a valuable addition to the Company's management team. His expertise in managing complex projects and delivering operational excellence aligns with Argo's commitment to innovation and quality.
Landry expressed his enthusiasm for his new role: "I am honored to join Argo's Board of Directors and contribute to the Company's vision. I look forward to working with the team to support the Company's growth and success."
The share price has been on a nice upward trend since April. At around CAD 15 million, the market capitalization remains anything but high. If the rollout is successful, a multiplication could be possible.
RENK: Valuation too high?
The RENK share lost more than 3% of its value yesterday in a generally weaker environment. The stock is currently trading at EUR 70, which is still 270% higher than at the beginning of the year. The transmission specialist now has a market capitalization of almost EUR 7 billion. This raises expectations for growth. Where the journey will take us in 2025 should become clearer on August 13, when RENK will report on the first half of the year. Today, we take a closer look at the analysts' forecasts. Most recently, there was an analyst call last week. Following this, the experts at Jefferies and JPMorgan confirmed their "Buy" recommendations. Jefferies sees the fair value of RENK shares at EUR 60, which is below the current level.
According to data service Refinitiv, analysts expect average revenue of EUR 1.35 billion for 2025 as a whole. This is likely to rise to EUR 1.60 billion next year and EUR 1.88 billion in 2027. Last year, RENK generated revenue of EUR 1.14 billion.
The consensus for operating profit (EBITDA) is EUR 272 million for 2025, EUR 334 million for 2026, and EUR 408 million for 2027 (2024: EUR 266 million). Net profit is expected to rise from EUR 141 million in 2025 to EUR 180 million in 2026 and EUR 234 million in 2027 (2024: EUR 103 million). This puts the P/E ratio for 2027 at an impressive 68.
Salzgitter: First arms euphoria, then forecast cuts
Defense fantasies also briefly boosted Salzgitter's share price. The steel group could supply more steel for the construction of tanks, warships, artillery, and military infrastructure. Another source of hope for the Company is Ilsenburger Grobblech, which manufactures sheet metal that is also used in military applications. Driven by this, the share price shot up from EUR 19 to EUR 28 within two weeks. However, the euphoria quickly faded.
The reason was a profit warning. Salzgitter reported preliminary half-year figures on July 17. Revenue fell from EUR 5.2 billion to EUR 4.7 billion and EBITDA from EUR 233.6 million to EUR 116.8 million. Due to the weak figures, the annual forecast was revised downward. Salzgitter now expects revenue of EUR 9.0 to 9.5 billion for 2025 (previously EUR 9.5 to 10 billion). EBITDA is expected to be between EUR 300 and 400 million (previously EUR 350 to 550 million). In the best-case scenario, earnings before taxes could break even, but a loss of EUR 100 million is also possible. This led to disappointment, and the share price fell by around 17% in just one day.
Perhaps that previous day's loss was a bit overdone. Yesterday, Salzgitter's share price managed to gain more than 6%.
It is no surprise that RENK and the entire defense industry are being valued ambitiously. However, there is hope that the companies will steadily grow into their valuations. Argo Graphene Solutions is working flat out on the rollout of its revolutionary products. The upward trend in the share price shows that more and more investors believe in its success. Salzgitter remains very volatile, like all German steel stocks. A long-term purchase of the share based on defense fantasies is not advisable.
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