21. June 2021 | 12:06 CET
Deutsche Bank, ThyssenKrupp, White Metal Resources: When opportunities arise from legacy issues
What will the market bring in the second half of the year? Will the takeover merry-go-round spin and blue chips continue to climb in the wake of the booming comeback economy? Or do infrastructure programs and further construction drive the steel sector? The chances are good that the economy is again breathing a breath of fresh air and is on the verge of a long-lasting upswing. Traditionally, this upswing is characterized by setbacks, particularly at the beginning. We outline how investors can invest, taking three stocks as examples.
time to read:
ISIN: DE0005140008 , DE0007500001 , CA9640461062
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Deutsche Bank: How investors can view the setback
If you believe in a booming economy, you could easily invest in banks for decades. Banks make money on every loan, use deposits for proprietary trading, thread deals and corporate mergers, and sometimes turn the big wheel. For a long time, Deutsche Bank, in particular, saw itself as a global player. In the meantime, they are baking smaller rolls again in Frankfurt, but the lean period that has lasted since the financial crisis seems to be coming to an end.
Investment banking, in particular, has repeatedly provided Deutsche Bank with good figures in recent quarters. The interest rate fantasy also means that the bank's bread-and-butter business could pick up again. The higher the interest rates, the more likely banks are to afford a small margin. The business model that worked for decades has all but fallen asleep since the great financial crisis. As Deutsche Bank reorganizes itself structurally in parallel with the tiny sparks of hope - among other things, 18,000 employees are to leave - the stock could find itself back in better waters. In the past five days, the stock has lost 7% but is on a long-term uptrend. The recent setback could be a test of the interim highs of 2018, after which the stock could turn upward again. However, the stock is unlikely to become a high-flyer any time soon - structural problems and challenges, such as the digitalization of the financial sector, remain.
ThyssenKrupp: What is wrong with the stock?
At a time when raw materials are increasing and the economy is booming again, steel producers are also enjoying increasing popularity. However, ThyssenKrupp's stock does not reflect this: it has lost 20% over three months. Over the past twelve months, however, the stock has made a small gain of 20%. However, compared with the market as a whole or other companies in the commodities sector, the growth has been relatively small. What is the reason for this?
The Group is in a restructuring phase. Among other things, the entire steel business is up for sale. The parties involved have been keeping quiet for months about what exactly will happen. Among others, a competitor has already submitted a bid. Most recently, it looked as if ThyssenKrupp wanted to restructure the steel business itself to sell it later or float it on the stock market. Unfortunately, what sounds like an opportunity can also be a burden. Many investors had hoped for a consistent cut; however, this does not seem to be happening now. As a result, the share is currently not a good choice when it comes to commodities.
White Metal Resources: Many projects and only around 7 million market capitalization
The situation is quite different for White Metal Resources. The Company from Canada is not comparable to a standard stock and is in an early stage. Nevertheless, it pursues an exciting concept and offers silver and copper in addition to gold. White Metal Resources operates Tower Stock, a gold project in the Canadian province of Ontario, the Okohongo copper and silver property in Namibia, and other projects in Canada. It also has three joint ventures in Canada, Newfoundland and Namibia. The sheer number of projects may surprise investors. But at White Metal Resources, there is a plan behind it: The Company has set itself to explore raw material projects with a purchase option and only later think about an acquisition at already fixed conditions. That saves funds, especially in the initial exploration phase, and increases flexibility - if a project is not very promising, White Metal Resources can simply move on.
Historical drilling results speak in favor that the Company will stay on the ball with the flagship Tower Stock project: 61.5 meters with 2.4 g/t gold or 1.5 meters with 546.6 g/t gold speak for themselves. Historical data is also available on many other projects. Okohongo in Namibia also shines with high copper grades of more than 1% and thus comes to 10.2 million tons of inferred resources based on historical data. According to modern standards, White Metal Resources intends to confirm and expand this data and convert it into a resource estimate. Since the Company is only valued at around EUR 7 million, speculative investors, in particular, can take a closer look at the value.
Invest in the future!
While stocks like Deutsche Bank or ThyssenKrupp struggle with legacy issues, White Metal Resources benefits from historical data and the emerging economy. Gold, but above all, silver and copper are needed for the future topics of regenerative energies and electromobility. Although the Canadian Company will not be mining any raw materials in the foreseeable future, the values are already lying dormant in the ground with a substantial valuation discount. For investors, this can be an opportunity.