20. September 2021 | 10:25 CET
Drägerwerk, Royal Helium, Bayer: These shares are stepping on the gas
Chemical products and gases are essential products for industry. These primary products are a good indicator of the current economic situation. Shortages are currently prevalent here as well. We explain why and outline three stocks related to this topic.
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ISIN: DRAEGERWERK VZO O.N. | DE0005550636 , ROYAL HELIUM LTD. | CA78029U2056 , BAYER AG NA O.N. | DE000BAY0017
"[...] We expect the first three wells to be drilled, cased, completed and tested by the second week of March [...]" Andrew Davidson, CEO, Royal Helium Limited
Drägerwerk faces a positive future
The Drägerwerk share is currently taking a short breather. But business at the medical technology company is going exceptionally well. In the pandemic year 2020, both sales and order intake climbed significantly. Drägerwerk is a ventilation specialist and also does good business with anesthesia equipment. Nevertheless, it will not be possible to repeat the record year in this form. That is why the share is currently weakening. In principle, however, Drägerwerk is promising. The pandemic has exposed the weaknesses of the healthcare system and put the focus on necessary investments.
With a price-earnings ratio (P/E) of around 10, the stock is still not expensive. That opens up the potential for long-term investors in particular. Although the share hardly offers a dividend, at least the prospect speaks in favor of Drägerwerk. Given the shortage of personnel in the healthcare sector and the increasingly ageing patients, technology could be the key to an even better functioning healthcare system. The share is not a high-flyer but remains promising in the long term.
Royal Helium: Operational success and correction
Royal Helium is another promising stock. The budding helium producer is benefiting not only from demand from medical technology companies, which use the noble gas in devices for imaging procedures but also from the increasingly important space sector. Royal Helium owns about 400,000 hectares of rights to explore for helium. The project is located in the Canadian district of Saskatchewan and offers several advantages due to its geological features. Since there are few to no carbons in the production, mining in Royal Helium's area can be considered environmentally friendly. The district also requires low royalty rates compared to other regions and a diverse mix of service providers and skilled personnel due to the existing oil and gas industry.
Having successfully completed three wells in the first few months of the year, Royal Helium drilled the Climax-4 well in recent months, where evaluations are currently underway. However, initial results indicate that the helium deposits in this well could be more significant than in Climax-3. The share has corrected by around 50% since its highs of April above the EUR 0.60 mark; the value could become interesting again. Operationally, the Company has made progress in the meantime. The current level appears favorable to invest in the noble gas with indispensable properties for many industries.
Bayer: Dull share prices despite innovations
Like Drägerwerk and Royal Helium, Bayer shares have also suffered in recent months. Over a three-month period, the share price has fallen by around 15% and almost 20% over the year. But what is the reason for this? Fundamentally, things look good for Bayer. While 2020 was a challenging year for the Company, it is now apparent that many of the construction sites of previous years, such as the Monsanto acquisition, could be positive for Bayer in the long term. The seed business fits well with the current inflation debate.
With innovative pharmacological processes, such as cell and genetic engineering, the Rhinelanders are looking for a big breakthrough. That the Company is innovative in every area is demonstrated, for example, by a corn variety that is largely resistant to extreme weather events. The share price has fallen recently but is also promising given the attractive dividend yield of around 3.5%.
Bayer thus outperforms the competition from Drägerwerk. While the medical technology specialist offers good products but little imagination, Bayer could soon surprise. The same applies to Royal Helium. The Company is only valued at around EUR 43 million and must therefore be considered speculative. However, the share price performance in the first quarter shows that it also offers excellent opportunities.