July 8th, 2021 | 12:33 CEST
Gazprom, Aztec Minerals, Steinhoff: Fast takeovers instead of lengthy procedures
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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
At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Gazprom: Solid, but ...
If you were to ask passers-by to name a commodity company, Gazprom would undoubtedly be a frequently mentioned candidate. Why? The Company supplies Germany with Russian gas, among other things, and has already been involved in one political dispute or another. Not least, former German Chancellor Gerhard Schröder advises the energy giant. Gazprom is currently making a name for itself with the Nord Stream 2 pipeline. The connection between Russia and Germany is intended to ensure that Gazprom can continue to supply energy to Germany for many years to come. Germany's Western allies, such as the USA, are critical of Germany's growing influence in Europe and openly oppose the pipeline. The project is also controversial within Germany. Since Russia does not exactly apply democratic standards to the opposition, there have been repeated calls for the project to be called off at the last minute, thereby throwing billions into the sand. But that does not seem to be the case at the moment - construction work is continuing. Moreover, Russia could sell its gas to the east instead of the west - after all, China's hunger for raw materials is unabated. It can also be argued that a joint project like Nord Stream 2 offers a reason to stay in the conversation.
Gazprom's stock is hardly suffering from political tensions. While Russian energy companies have always been valued lower, this across-the-board valuation discount ensures that political scandals and anything else that makes the headlines in the short term is hardly a factor in the share price. What is more, the gas keeps flowing: In March, Gazprom delivered 13% more gas than expected. Gazprom's stock is benefiting from the company's good market position. On top of that, it pays a hefty dividend. The share is solid but not a high-flyer.
Aztec Minerals: Project developer with good drilling results
In contrast, the young Company Aztec Minerals has the potential to become a high-flyer. Aztec operates in America and is advancing its flagship Cervantes project in Sonora, Mexico. It is a gold and copper project joined by CRD, a property in Arizona that offers the potential for silver, lead, zinc and gold. On the latter, Aztec most recently reported drill results of 5.71 g/t gold and 40.5 g/t silver over a distance of 32 meters. All five holes encountered gold and silver occurrences. "Our initial results from the 2021 drill program exceed our expectations and show large grades," said Aztec CEO Simon Dyakowski.
Aztec Minerals is currently valued at only about EUR 15 million. Especially in the early stages of exploration, drill results can decisively change the market's view of the project. Aztec Minerals has a clear strategy: instead of bringing projects into production itself, Aztec Minerals focuses on the development and pursues the goal of advancing properties to such an extent that they become attractive to large commodity companies who then make a takeover bid. And this creates a lot of potential for shareholders. Firstly, drill results are likely to drive share prices, and, secondly, takeover bids are usually at a premium to the current share price. The Aztec Minerals share is exciting and suitable for speculative investors looking for a portfolio addition that stands for dynamism.
Steinhoff: Shareholders in court
Shareholders of Steinhoff have also been looking for dynamism in their portfolios in recent months. The furniture group, involved in an accounting scandal a few years ago, is still deep in the legal mess. For months, gamblers hoped that this legal dispute would be settled and drove the stock up. Most recently, however, Steinhoff suffered a setback. A ruling diminished hope for a settlement of the conflict, and the share price plummeted. Steinhoff remains a share for gamblers.
While it hardly makes a difference whether these gamblers invest their capital at the roulette table or in the ailing furniture group, the situation at Aztec Minerals is different: Here, the development of raw material projects in the early stages is part of everyday business. Instead of hoping for court rulings, Aztec shareholders are waiting for a strategy that the team involved has already successfully implemented to work out again. For those who find stocks, like Gazprom, too dull, Aztec can achieve the same results with a much smaller capital investment. However, investors should bear in mind that such investments are highly speculative.
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