May 11th, 2021 | 14:50 CEST
Deutsche Rohstoff AG, Gazprom, Barrick Gold: Commodities in demand as never before - how to profit
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"[...] 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 Rohstoff AG: What is next?
Deutsche Rohstoff AG has been on the stock exchange floor for more than ten years and has made a name for itself as a far-sighted German Company with many contacts. Deutsche Rohstoff AG, based in Mannheim, operates oil fields in the USA and is also involved in other projects involving precious metals and tungsten. Looking ahead to 2021, the Company is optimistic and has raised its outlook. Although the Company has somewhat upset dividend hunters by waiving a dividend payment, the Mannheim-based Company can, among other things, imagine positioning itself in the direction of electromobility in the future. In addition to lithium, other strategic industrial metals such as cobalt or copper could also be considered.
Deutsche Rohstoff AG has already seen in the course of its investment in Almonty Industries that it makes perfect sense to position oneself in narrow markets. Almonty already mines tungsten, urgently needed in the metal industry and medical technology and other areas. The Sangdong mine currently under construction in South Korea could become the largest tungsten project outside China.
China has so far primarily controlled the market. As Deutsche Rohstoff AG has a stake of around 12.8% in Almonty Industries, the Mannheim-based Company benefits indirectly. The Company could also take a comparable stake around other raw materials. Since Deutsche Rohstoff AG is globally networked and brings great expertise around commodities, the stock could be a good choice as a commodity base investment. In particular, investors who prefer German companies can buy the stock. Although the share has already gained almost 15% in the past three months, it still has potential in the long term. In addition, there is the fantasy about a possible investment around battery metals.
Gazprom: Caution is advised despite low costs and many options
If you prefer to invest in energy commodities in a highly concentrated manner rather than in a broadly diversified way, you could also consider the Gazprom share. Russian companies traditionally excel with low production costs and low valuations. Last year, the pandemic also put the Russians under a lot of pressure and spoiled many a quarterly result. But with increasing prospects of opening up the market and rising energy prices, Gazprom's share price also benefits. Even the media reports about the controversial Nord Stream 2 pipeline did not affect the share price - in the past month alone, it rose by 12.6%.
Although the risk of further sanctions against Russia or Russian companies is latently weighing on Gazprom, the Russians appear to be well-positioned. Even if Nord Stream 2 should fail at the very last meters, the Company has a good chance of selling its gas to China. Given this growth perspective and the current high dividend yield of around 6%, the stock is not unattractive. However, there are always risks associated with investments in Russia. Cautious investors, in particular, should be aware of this.
Barrick Gold: No more than mediocre
The share of Barrick Gold is also considered a perennial favorite among private investors. The Company is almost exclusively dependent on the gold price and is currently benefiting from the precious metals recovery. But does that already make Barrick Gold a promising stock? The past few months have shown that Barrick and the gold price often run in lockstep. Even in times of the greatest gold euphoria, Barrick's stock has always lacked a bit of momentum. The reason: Barrick is forced to replace mined reserves. In the past months, this did not succeed - above all, the pandemic made it challenging to examine new projects.
Consequently, there is a lack of imagination around Barrick Gold. Last year, the Company was even forced to pay a special dividend. Although this pleases investors in the short term, it casts a bad light on a company at second glance: Where else is Barrick supposed to invest when there are no options in the bread-and-butter business of gold mining? The stock is solid, and at some point, a takeover will work out. But Barrick Gold has never been a high-flyer and will never be one again.
The most promising opportunities for investors lurk in shares in smaller companies anyway. Deutsche Rohstoff AG has set standards with its investment concept. Instead of investing directly, private investors can sit back and benefit from the expertise of the Mannheim-based commodity professionals. Added to this is the excellent oil business. Compared to big players like Gazprom and Barrick Gold, Deutsche Rohstoff AG looks like an agile investment company. The share is worth a second look.
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