November 16th, 2021 | 10:02 CET
Deutsche Telekom, MAS Gold, K+S: An insider tip against inflation
Table of contents:
"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
Deutsche Telekom: Solid boredom buster
Deutsche Telekom is a true people's stock. At the end of the 1990s, the stock market debut of the pink giant attracted many private investors to the trading floor for the first time - and immediately caused them to slip. After a brief period of hype, the share price plummeted. But the stock has recovered - at least a little. Today, the share price is almost higher than it has been in the past 10 years. At the same time, the stock offers a dividend yield of more than 3%. Since telecommunications services have become an indispensable part of the modern world and the Internet is now just as much a part of essential services like electricity or heating, Deutsche Telekom shares can certainly be considered an attractive inflation investment. Why? The contributions for Internet and mobile communications flow in month after month. Deutsche Telekom also has a certain pricing power over its customers. If necessary, increases of a few percent can be easily hidden or otherwise concealed in new service packages. Since Deutsche Telekom scores with good performance, customers will remain loyal to the Company even if it becomes a little more expensive.
However, for a share to be suitable as a long-term investment, the Company must also be able to convince in operational terms. In the case of Deutsche Telekom, the assessment is mixed. Although the Company scores particularly well with a strong US business and otherwise with promising developments in almost all areas, such as T-Systems, the Company offers cautious investors only a low equity ratio. In chart terms, the share has fallen back again after a positive signal in the summer. Beyond EUR 17.50, it will be decided whether the share can take off in the long term. Currently, the signs are somewhat on a sideways trend.
MAS Gold: Many good reasons and EUR 10 million market capitalization
The MAS Gold share is of a completely different caliber than Deutsche Telekom. The project developer in the Canadian district of Saskatchewan is currently valued at only around EUR 10 million. The Company has set itself the target of reporting a gold resource of 1 million ounces and finds the best conditions for this in one of the most popular mining locations in the world. The target is the La Ronge gold belt, where MAS Gold has several projects and wants to create synergies between these projects. Centralized processing facilities could ensure that capital expenditures are reduced when measured against the individual project. MAS Gold calls this strategy a hub-and-spoke model and is also working on acquisitions of properties in the region in parallel to the exploration of existing deposits.
MAS Gold's approach is interesting because it allows the Company to actively influence several factors to increase valuations: First, multiple projects provide a steady flow of news following exploration work, which should attract new investors. Second, synergies at a later stage of development could justify share price premiums, and third, MAS Gold's multiple projects within a region give it an information advantage in potential acquisitions. While the hub-and-spoke model also offers regional concentration risk, regional risks should not be as significant in mining-friendly Saskatchewan. The stock is highly speculative, but that makes it all the more suitable as a small portfolio addition with multiplication potential. Although the gold market is currently anything but "hot", these are perfect conditions for anti-cyclical investors who build up positions gradually and in tranches.
K+S: Nice trend, but...
Like MAS Gold, the K+S share is also considered a suitable choice for inflation protection. The fertilizer and salt producer benefits from rising prices for agricultural commodities and has also freed itself operationally in the past year. Most recently, K+S reported a 32% increase in revenues to EUR 746 million. Earnings also improved - after taxes, the Company posted a profit of EUR 1.279 billion. So everything is rosy at K+S? After the figures, several analysts issued "hold" recommendations. Although the share has recently shown a clear upward trend, there are several resistances ahead. The air is likely to become thin at EUR 18 at the latest, probably even before that.
While K+S is one of the obvious choices for investors regarding inflation protection, this deliberate effect could be quickly nullified in the event of profit-taking after the end of the short-term uptrend. The Telekom share is somewhat less hot in this context. The market has distributed even less advance praise at MAS Gold - the value has been trading sideways for months, but at the same time offers some possible catalysts for rising prices. A rising gold price could leverage this potential.
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