Expropriation Shock, E-Prescription Boom, Critical Raw Materials: Vonovia, Redcare and Strategic Resources in Focus

Redcare Pharmacy: E-prescriptions are putting the turbo on digital pharmacies

The days when we made the pilgrimage to the brick-and-mortar pharmacy on the corner with a pink slip of paper are finally coming to an end. At least, from the perspective of online pharmacies and their advocates, this could soon be the case. Whether this will happen remains uncertain, however. The fact is, though, that the entire healthcare sector is currently undergoing a digital disruption unlike any other. Redcare is riding this upheaval with great skill. With the nationwide and mandatory introduction of electronic prescriptions in Germany, the company has finally found the long-awaited catalyst to expand its market share as quickly as possible. Customers increasingly appreciate the convenience of having necessary medications delivered simply, quickly, and discreetly right to their front door. This shift is no short-term fad; it could lead to a lasting, profound change in consumer behaviour within the multi-billion-euro healthcare market.

A closer look at the business model shows the company stands out for its scalable logistics and efficient infrastructure. The operating figures speak for themselves, as prescription medication sales are also rising. The company benefits from strong contribution margins in its core segment and a growing base of repeat customers who return regularly after their first order. The more patients successfully overcome the initial hurdle of placing their first order, the stronger the so-called "lock-in effect" of the extremely convenient platform becomes. The economies of scale built up over time are now slowly taking effect and gradually driving profitability to new heights.

However, analysts still differ on valuation. The stock is not a classic value bargain, but a pure-play growth stock already trading at ambitious valuations. Dividend hunters are probably out of place here, as the earnings are funneled directly back into further expansion and customer acquisition. Those who believe in the continued digitization of the pharmacy market will find an interesting investment here, but must also be able to withstand the typical, and at times severe, volatility of growth stocks. A few months ago, the stock was still trading at a significantly lower price.

We move away from online pharmacies and turn our attention to brick-and-mortar properties and buildings in the German capital, where political headwinds are now blowing quite strongly.

Vonovia: Political Headwinds and Interest Rate Fears Weigh on the Real Estate Group

For Europe's largest residential real estate group, the current situation is like a storm with strong headwinds. The Left Party's recent election victory in Berlin has reignited the already heated debate over the impending expropriation of large residential real estate companies. The Left Party's lead candidate, Elif Eralp, left no doubt and emphasized that, should her party join the government, large-scale socialization would be on the agenda. With approximately 130,000 apartments in the German capital, Vonovia is inevitably and directly in the line of fire and has thus become the central target of this political conflict. Although the company plans to build about 1,000 additional units in Berlin and points to 6,000 apartments built since 2013, this does little to dispel investors' deep mistrust.

As if this political pressure were not enough, the European Central Bank's interest rate policy is weighing on the debt-intensive business model. The key interest rate hike could not only make future and ongoing refinancing more expensive but also put downward pressure on the portfolio's balance-sheet valuations. Nevertheless, the operating business remains surprisingly robust and resilient, albeit with some weaknesses. In the first half of the year, adjusted EBITDA actually increased by 2.4% to EUR 1.46 billion, thanks primarily to a stable leasing business. However, operating free cash flow plummeted 45.4% to just EUR 607.5 million. Nevertheless, management maintained its full-year forecast, which calls for adjusted EBITDA of between EUR 2.95 billion and EUR 3.05 billion.

Reactions on the stock market have been intense at times in recent months. The share price has lost significant ground since the beginning of the year and is now struggling quite desperately to hold the psychologically important EUR 17.00 mark. If this level is breached, the price could fall significantly further. Analysts are somewhat divided in light of this situation: Goldman Sachs has cut its price target to EUR 21.20, while Berenberg Bank has set a target of EUR 34.50, as it considers expropriations unconstitutional. For bold investors, this level could represent a long-term buying opportunity. Provided, of course, that interest rates eventually stabilise and the left's political rhetoric does not ultimately translate into concrete actions and policies.

From Berlin, we head to North America and Northern Europe. A small commodities player is emerging that supplies the materials needed for a climate-neutral future.

Strategic Resources: Key Commodities for the Green Steel Revolution

The global steel industry, often decried as "dirty", is facing what is likely the greatest upheaval in its long history. The traditional blast furnace process, heavily reliant on coal, must be phased out rapidly and nearly worldwide to have any chance of meeting increasingly stringent climate targets. This is where Strategic Resources comes in, positioning itself as a supplier for the emerging production of fossil-free (green) steel.

The EUR 17 million FutSteel research project in Finland selected Strategic Resources' vanadium-rich magnetite concentrate at the end of June. This represents a major industry endorsement, underscoring the material's high quality and suitability for state-of-the-art, hydrogen-based reduction processes.

Put simply, this means that hydrogen is set to replace coal in the future. This requires high-quality iron ore as a raw material. The testing program is examining whether Strategic Resources' concentrate works in these new processes.

The company's operational outlook appears well thought out. In addition to its Finnish foothold in Mustavaara, management is developing the massive BlackRock project in Quebec. There, at a logistically ideal deep-water port, a modern facility is to be built that will produce 4 million metric tonnes of high-purity iron ore pellets annually for direct reduction.

With a planned mine life of 39 years, a partnership with Javelin, and access to clean, affordable hydropower, the company aims to establish as solid and long-term a platform as possible here. The company's latest presentation from September 2026 logically demonstrates that the rapid electrification of steel mills could soon lead to a massive structural shortage of precisely these high-quality pellets. In addition, the Canadian project produces strategic byproducts such as titanium and vanadium, which could even play a key role in battery technologies in the future.

A look at the current technical chart and recent trading activity makes this even clearer. The stock is currently trading at around CAD 0.235, within a trading range of CAD 0.21 to 0.305. For the stock to make a decisive technical breakout to the upside, it must sustainably break above the resistance level of CAD 0.31—or, even better, CAD 0.32. An initial breakout attempt a few weeks ago was nipped in the bud, as sellers were in the market even amid increased volume. However, the market absorbed the shares offered for sale surprisingly well. If the stock now closes above CAD 0.31, the breakout would likely be confirmed, and the price could move toward CAD 0.40. Furthermore, from a technical perspective, there would even be room to move into the CAD 0.50 to CAD 0.60 range. Of course, this would require further positive fundamental news. However, prices just below CAD 0.30 would already be a first and a very positive sign in the ongoing battle between bulls and bears.

Redcare is benefiting from fundamental structural changes in the healthcare sector, but its ambitious valuation requires investors to have strong nerves. Vonovia remains, for now, an unpredictable victim of interest rates and politics, but could reward patient, bold contrarian investors if it finds a bottom around EUR 17.00. Strategic Resources operates in the rapidly growing niche market for green steel. The company has long-term projects, so the stock could be an interesting and promising addition to a portfolio if it breaks significantly above CAD 0.31.