October 10th, 2023 | 07:30 CEST
Good for the Climate - and the Returns: Nordex, Vestas, GoviEx
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"[...] When we acquire something, we want to make sure that the acquisition fits with our strategy and has the potential to be successful for our shareholders. [...]" John Jeffrey, CEO, Saturn Oil & Gas Inc.
Doldrums at Nordex, Vestas and Co. - When will the wind turn?
The study "European Power Sovereignty through Renewables by 2030" shows that achieving climate neutrality is not as challenging as it might seem. The study calculates that in Europe, it requires an annual investment of EUR 140 billion to make the electricity market climate-neutral by the end of 2030. In addition to photovoltaics, wind power is expected to be an important pillar for this. Particularly in winter, this technology is essential for meeting the demand for electricity from renewable sources. But what about companies in the wind power sector? Indices such as the "Global X Wind Energy" fell significantly last week. Even well-known wind power shares like Nordex and Vestas lost ground. Looking at the past six months, the outlook for these stocks does not appear favorable either, with Nordex losing 13.8% and Vestas as much as 28.5%.
Analysts attribute the share price weakness to the perspective of persistently high interest rates. According to industry experts, many wind power projects were negotiated under the impression of favorable commodity prices and low interest rates. As soon as construction starts, the faces of wind power companies become longer and the margins smaller. The intense competition in the market is another factor that prevents companies like Nordex, Vestas, and Co. from making substantial profits in the current market environment. So, how can investors navigate wind power stocks in this situation?
The state of wind shares
Both Nordex and Vestas are in a long-term downtrend. However, Nordex has been considered a problem child for some time and could, therefore, be more likely to achieve a turnaround. Analysts are also optimistic and see around 50% upside potential for the stock at the current level. Currently, it may not seem like wind energy shares are responding to this optimistic outlook, but the sector remains a turnaround candidate. Those companies that cut costs most effectively will also be the first to profit again. Currently, however, there is no pressure to act.
GoviEx Uranium: Three pillars in Africa
One share that has also lost around 10% over a six-month period but has recently developed much more momentum than wind power shares is GoviEx Uranium. The Company has an extensive resource deposit with over 130.6 million pounds of uranium (U3O8) in the measured and indicated categories and 30.5 million pounds of U3O8 in the inferred category. GoviEx's projects are located in Mali, Niger and Zambia. The latter two projects have mining licenses; further, the Company believes there is significant potential in the area of exploration for new deposits. GoviEx will present online at the 8th International Investment Forum (IIF) today, October 10, from 3:30 pm. Registration for the event is free of charge.
The stock lost ground in the wake of the coup in Niger but quickly recovered. GoviEx wrote in the summer, "Niger is a mining-friendly country and has continuously mined uranium for the past 50 years despite regime changes. This longstanding stability in the mining sector is a testament to the country's resilience and its quest for development," and pointed out in the summer that all activities in Niger are unaffected. Africa has always been considered a popular location for uranium companies. With a high double-digit number of new reactors worldwide in the planning stages, the radiating material is also likely to be needed. The World Nuclear Association reports that 45 new nuclear power plants are planned in China alone, with another 25 in Russia, 12 in India, three in the US and others in Hungary, the UK, Romania and even Japan.
While GoviEx Uranium's stock must be considered speculative due to its market capitalization of CAD 123.5 million, the valuation also shows that the Company is anything but a niche play in the uranium mining industry. If the market prices out political uncertainty in the coming months and more nuclear power plant projects become realistic, the share could continue to show dynamic development. On the other hand, the turnaround must first be reflected in the figures for wind power shares from Nordex, Vestas and Co. Investors with a good sense of timing can keep these stocks on their radar.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
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