Gazprom, K+S, Blackrock Silver: Watch out for the turnaround - Do not miss it!

Gazprom - Breakout to the upside despite hiccup around Nord Stream 2

The commodity giant from Russia is struggling with political issues as usual. However, the headline density regarding Gazprom and the North Sea pipeline "Nord Stream 2" decreased significantly recently. Could this be because the construction of the EU pipeline has been halted for the short term following the lawsuit filed by Nature and Biodiversity Conservation Union? It is possible, because the case has achieved a suspensive effect until a court decision is made. Of course, this may still take some time; the mills of the law grind slowly, as is well known.

The German-language edition of UKR-Inform reports that the French Minister of Economy and Finance shares Ukraine's concerns. In his view, Ukraine's Nord Stream 2 needs cannot be considered separately from the project. Ukraine wants to be extensively compensated for the transit of Russian gas to the EU. It all sounds like political gridlock and the consideration of many individual interests. However, after a brief period of criticism, EU leaders have announced that they stand in solidarity with Germany to construct the EU pipeline. Neither Ukraine nor the Navalny case, especially not the US sanctions, has changed this so far.

Gazprom's figures, however, read very well. Gazprom managed to increase gas exports to countries outside the former Soviet Union by 28% in the first four months of the current year. As a result, the Company should be able to make up for the shortcomings of previous years this year. Gazprom can safely sit out the delays surrounding Nord Stream 2, as gas reserves in the North Sea are dwindling. For this reason alone, the share of natural gas imported from Norway and the UK is likely to fall in the coming years. At the same time, that from Russia is likely to rise - other alternatives would be fracked gas from the USA or supplies from Qatar or Iran, but no one wants that.

Gazprom remains a hot potato for political reasons. However, at a price of EUR 5.53, the stock has a P/E ratio of 5 and a dividend of over 8%. Thus, Gazprom remains one of the cheapest commodity stocks, no matter how long Nord Stream 2 is delayed.

Kali & Salz (K+S) - If it wasn't for the debts

Fertilizer and salt Group Kali und Salz (K+S) is looking more positively into the future thanks to a flourishing business with de-icing salt and the recovery of global agricultural markets. Company CEO Lohr now expects EBITDA to rise from EUR 500 million to EUR 600 million in 2021. The outlook continues to include a one-off gain of EUR 200 million expected in the summer from the establishment of the REKS joint venture, in which the Kassel-based Company will bundle its waste management business with that of Remondis subsidiary Remex. However, the deal still has to be approved by the EU antitrust authorities.

So far, management had forecast EBITDA of EUR 440 to 540 million for the current year. Even without the REKS effect, K+S is confident of a decent increase in operating profit in 2021, as the figure for the challenging pandemic year, 2020, was just EUR 267 million. Profit growth continues to be held back by higher freight and energy costs. And costs connected with environmental regulations in Germany also remain high, with K+S management expecting a decline only from next year.

In the first quarter, the northern Hessian Company achieved a 13% increase in revenues to EUR 733 million thanks to the winter weather and the recovery in agriculture, while EBITDA climbed by more than a quarter to EUR 126 million. Because of the brighter outlook, K+S adjusted the valuation of assets on its balance sheet, which has reportedly resulted in an increase in value of EUR 180 million in the first quarter. The current value recovery benefits the Group's balance sheet; in the previous year, K+S had to write down a striking EUR 1.9 billion in response to the challenging agricultural markets. Although this was less than initially announced, it had already pushed equity down significantly due to the high level of debt.

In the meantime, however, there was plenty of money in the coffers. K+S completed the sale of its American salt business at the end of April. After taking into account debts and cash, the sales price was the equivalent of around EUR 2.6 billion, somewhat more than previously announced. The money is now to be used in full for the gradual reduction of debt. Last week, the K+S share briefly peeked above the EUR 10 mark; now, the sustainable breakout must also succeed.

Blackrock Silver - There is not much missing for the rally

Blackrock Silver shares experienced a prolonged consolidation, which now seems to be completed above the CAD 0.80 mark. Because parallel to the recovery of the precious metals markets in May, there were also good drill results to report. Blackrock has excellent properties at Tonopah West, located along the established Northern Nevada rift in north-central Nevada and the Walker Lane trend in western Nevada.

Recent drilling along the eastern boundary of the Tonopah West project is now 65% complete, with current core drilling continuing to focus on the Victor target and delineation of the DPB resources. The DPB program consists of approximately 30,000 meters of diamond core drilling from 20 drill sites within a large, multi-level target. This broad, high-grade multi-axis system is located in an area of 1,500 meters by 600 meters. Drilling to date has already identified four new veins, bringing the total number of veins within the DPB to six.

Blackrock shares are currently trading at around CAD 0.82 and are in a wait-and-see position on the chart. The more prominent precious metal promoters have jumped slightly so far, and the positive trends were also confirmed in the last correction week. With a closing price of USD 27.40, silver is also on the verge of a massive breakout signal.

Those who position themselves in Blackrock Silver are betting on a promising drilling program and can calmly wait for the technical development in the silver price because the reaction to the upside should be initiated soon.