October 23rd, 2020 | 14:36 CEST
Grenke, Delivery Hero, Desert Gold: Momentum shares on hold
There are stocks where there is something in the air. For some of them, the trend is ultimately negative, others never pick up speed, and others just take off. Three of these potential momentum stocks are Grenke, Delivery Hero, and Desert Gold. At Grenke, the eyes of the market are focused on the accusations of balance sheet manipulation. Although the Baden-Baden-based Company has hired external auditors, suspended supervisory board posts, and announced a complete investigation, the share price is still not getting off the ground. For experienced investors, this means that something is coming to a head!
time to read: 3 minutes
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Author:
Nico Popp
ISIN:
CA25039N4084 , DE000A161N30 , DE000A2E4K43
Table of contents:
"[...] We have built one of the largest land packages of any non-producer in the belt at over 440 sq.km and have made more than 25 gold discoveries on the property to date with 5 of these discoveries totaling about 1.1 million ounces of gold resources. [...]" Jared Scharf, CEO, Desert Gold Ventures Inc.
Author
Nico Popp
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.
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Grenke: Something is coming to a head!
It is still unclear in which direction the share will ultimately go. However, it may make sense to take a closer look at the business in the first half of 2020. Initially, the Company was on record course before the outbreak of the pandemic. Then there was a significant slump, and towards the end of the first half of the year, the Company recovered. In July, Grenke already had new business, which was around 70% of the previous year's figure. When all signs of recovery were in place, the accusations followed. Since Grenke has opened new locations in recent months and the business has also survived the initial lockdown phase well, the signs for growth are good. Given the accusations and their complexity, however, private investors should wait with an investment in this potential momentum value until there are more facts about Grenke.
Delivery Hero with lockdown potential
The share of Delivery Hero has recently provided encouraging facts. In the first half of the year, the DAX stock achieved a sales growth of 87%. Given the lockdowns and the figures in other sectors, investors can rightly claim about the share: There is fire in it! But how sustainable is Delivery Hero's development? The Berlin-based Company has long since sold its German business and is focusing primarily on Asia and the Middle East. The Company is particularly well positioned in the latter region. Delivery Hero is paying for its rapid growth with losses. It remains to be seen whether the bet will work out for investors. On a one-year horizon, the share price has risen 120%, but it has been weakening recently.
However, the positive development of the business in the first half of the crisis in 2020 could be a blueprint for further development. More and more countries are imposing lockdowns, examples being Ireland and the Czech Republic. The Middle East is also aware of the threat posed by the virus, and new lockdowns could be beneficial for Delivery Hero's figures. However, because of the continuing high valuation, it remains unclear whether the share will be able to pick up as much momentum as in the first half of the year.
Team around gold share of the summer continues working
One stock that is predestined to be a Momentum Stock is Desert Gold. On a one-year horizon, the share's price only shows a return of 2.4%, but between May and August alone, the share achieved a return of more than 100%. Desert Gold is exploring two promising gold projects with a strategic location in Mali. Among others, Barrick Gold, B2Gold, and Iamgold are active in the country. During the summer, good drill results ensured that the price quickly gained momentum.
The Company's properties still show areas that offer further exploration potential. The Company is currently working on a 43-101 mining standard technical report and plans to publish it in the coming weeks. Desert Gold also plans to resume exploration work in November.
Desert Gold: Risk appears manageable after price losses
At a time when the pandemic is once again spreading, and states may be forced to support the economy, gold investments appear promising. While the gold price has recently stayed close to the highs, the Desert Gold share has fallen sharply. Such selling pressure can provide entry opportunities for smaller companies that have taken corporate actions in the past. Given the full coffers at Desert Gold, the promising projects, and the fundamentally strong situation for gold itself, the share could soon pick up speed again. Compared to, say, Delivery Hero, the valuation at the current level seems more attractive.
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