October 5th, 2022 | 10:58 CEST
Do not miss this train! Volkswagen, Varta, Infinity Stone Ventures
Table of contents:
"[...] 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
Volkswagen: What is still possible?
Volkswagen is one of the most important car brands in the world. Many Germans saved up for a Golf when they were young. The brand is also popular in the US and China. In the United States, Volkswagen sales just bucked the general trend. Supply chain problems and buying restraint? Not a chance! In Europe, too, many of Volkswagen's new models line the streets. In fact, it feels a bit like the Wolfsburg company has gone from climate killer to trendsetter: The futuristic designs of the e-cars in particular are now well received.
Volkswagen set the course for the future early on - something had to happen after the emissions scandal. In Spain, VW is investing around EUR 10 billion in a battery factory. Autonomous driving is also becoming more and more of an issue. To this end, Volkswagen has concluded an agreement with Qualcomm. The chips from the US company are to be installed in cars from Lower Saxony by 2026. The share has been cyclical in recent weeks. But there is a glimmer of hope: In September, the industry-heavy DAX outperformed the US indices for the first time. That could suggest that cyclical stocks are now building up relative strength. Volkswagen's share is picking up steam but is still trading near its lows for the year. This stock is conservative, but not lacking in interest.
Varta: More than a technical countermovement?
Conservative, in the best sense, is also Varta. For years, the battery manufacturer has won over the big names in the consumer electronics sector with its button cells. Recently, however, things have been getting heated at the battery specialist. The planned e-car industry did not get going in recent months. Years ago, the stock market had already distributed advance praise and, at times, made Varta "the German Tesla". But so far, hardly anything has happened. A few days ago, however, events came thick and fast: First, Varta cancelled its annual forecast, and then CEO Herbert Schein resigned. It quickly became clear, however, that Schein would be taking on a new role in another important position at Varta. The manager will become head of V4Drive SE, i.e. the electromobility and battery packs division. Will the division be able to pick up speed quickly? The market has recently been very skeptical.
At the low, the share slipped below the EUR 30 mark. Today, it is already back around EUR 34. The sell-off of around 70% in one year shows that share prices can be volatile even for big names. Establishing a new business unit is associated with risks. Those who bet on the share at triple-digit prices had to give up ground. Currently, however, Varta could become interesting again. At least for technical reasons, the share has potential. In addition, the bad news is already now well known.
Infinity Stone Ventures: With smart means to lithium
One share that should not be affected so much by the current economic situation is Infinity Stone Ventures. The Canadians are exploring for lithium in Quebec and Ontario. Just recently, the Company managed to acquire two land packages. One property is adjacent to Infinity Stone's Taiga project in Quebec, and the other is located about 9km southeast of the Camaro project. The properties are characterized by historically mapped pegmatite formations and are expected to be explored in more detail soon. "Infinity Stone is aggressively expanding its footprint in the rapidly developing James Bay Lithium District by staking additional claims with strategic exploration potential," commented Zayn Kalyan, CEO of Infinity Stone, on the acquisition.
While many commodities have been on a roller coaster ride in recent months - with recession fears spreading - lithium held steady in 2022 after nearly quintupling in price in 2021. This relative strength in the lithium price can be attributed to the high demand from industry for the white element. Infinity Stone Ventures is dedicated to identifying and quantifying deposits using advanced exploration techniques. Due to the high demand for battery metals, the underlying conditions appear positive. Given the market capitalization of around EUR 11 million, the share is speculative, but the stock has everything it takes to give a speculative portfolio a boost in returns. Battery metals are booming.
The latest developments at Varta show that looking for investment opportunities at the beginning of the value chain is probably better than in industrial companies that have yet to conquer a new market. Those who want to succeed with stocks like Infinity Stone Ventures should take anticyclical positions. The share has recently come back significantly but is still in an uptrend on a view of a few months. The market is slowly but surely looking ahead. Investors with a bit of courage can jump on the incoming train.
Conflict of interest
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