August 3rd, 2022 | 13:10 CEST
Green wave for your portfolio! Meyer Burger, Erin Ventures, Shell
Table of contents:
"[...] Boron is one of the most versatile elements in the whole world! Everyone reading this text regularly uses hundreds of products that depend on boron. [...]" Tim Daniels, CEO, Erin Ventures
Meyer Burger: Is the horsepower hitting the road?
The share of the German specialist for solar modules, Meyer Burger, is a penny stock. That is no wonder - after all, the Asians overtook the German solar industry years ago and have also been cheaper since then. But Meyer Burger is experiencing a second spring. The trend toward regionalization in the wake of disrupted supply chains and geopolitical conflicts means there is now a great deal of interest in continuing to act for oneself in key technologies. But Meyer Burger has not been self-sufficient for a long time. Just yesterday, the Company cut its supply forecast by 30% - meaning that production volumes in 2022 and 2023 will be lower than previously announced.
Despite this setback, the Company benefits from the high demand for solar modules. Instead of selling to power plant operators, the Company wants to sell its panels more to private individuals again in the future. Here, the margin is greater. At Meyer Burger, despite the lower production figures, a similar effect could occur as at Mercedes-Benz during the peak of the chip crisis. Although the assembly lines were partly at a standstill, profits climbed. After the rapid rise in Meyer Burger shares and yesterday's strong correction, volatility is likely to remain high for the time being. Investors need to be wary of Meyer Burger, partly because of China's competition - not everything in short supply is a good deal.
Erin Ventures: Boron is hardly investable as a GreenTech element so far
Erin Ventures does not have to contend with low-cost competition and supply chain issues. The Company operates a boron project in Serbia. Boron is a substance that is used in many things. In addition to more mundane things, such as glass, it is also used in smartphone displays, photovoltaic panels, insulation material for houses, and wind turbines. There is also more boron than lithium in many batteries for e-cars. "Boron has unique properties and [can] only be replaced with difficulty. Boron is the element that is among the most important and ubiquitous, and at the same time the least present in the minds of consumers or investors," Erin Ventures CEO Tim Daniels said in an interview a few weeks ago.
Currently, an oligopoly prevails in the boron market. In addition to a state-owned company in Turkey and Rio Tinto in California, several smaller players are making a killing from the element. "The profit made by Eti Maden has risen from USD 17 million to nearly USD 500 million in just a decade. This development started even before climate neutrality was a big issue," says Daniels, referring to the Turkish state-owned Eti Maden. Just a few weeks ago, the Company published an economic feasibility study. The study, which according to management, is conservatively calculated, impresses with positive key data, such as a net profit margin of 69%. Immediately after the news was announced, Erin Ventures' share price surged from CAD 0.06 to CAD 0.10. The stock has since returned to its original level. Given the tight market around the sought-after boron and the positive key data, investors may want to take a closer look at the smallcap with the single-digit market capitalization.
Shell with little esprit
Shell's stock is anything but a smallcap. The oil multinational has been projecting a green image for years and also operates offshore wind farms. However, its core business is still oil - around 70% of sales come from this sector. It is also interesting to note that Shell operates the world's largest network of service stations. As is well known, not only gasoline is available there. Hydrogen could also be added in the future. In China, Shell has already entered into its production. In 2021, the Company grew stably but was still far from its pre-pandemic size. In addition to a stable dividend, the Company has repeatedly relied on share buybacks in recent months. This shows that the market is not really taking to the stock, and Shell itself needs to take action in the area of "price maintenance". The share is solid but not a high-flyer. Shell shareholders are unlikely to notice much of the boom in renewables.
To invest in sustainable energy, investors need to look carefully. Often, companies do not put their horsepower on the road. Meyer Burger, with its capacity problems, is the best example. However, if you think a little out of the box, you can get your foot in the door on critical commodities. The boron market is closely tied to green tech trends and is barely tapped from an investor's perspective. Erin Ventures is an exciting small cap. However, the stock remains speculative despite the promising outlook.
Conflict of interest
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