20. May 2021 | 07:55 CET
Grenke, TUI, RYU: Success with comeback stocks
When companies are punished by the market, it usually leads to negative exaggerations. When it became clear after the outbreak of the pandemic that tourism was in the doldrums, investors even cautiously priced in bankruptcy for travel and tourism company TUI. When Grenke was confronted with accusations about opaque balance sheets, the share price also plummeted. We look at three shares to see how the market can continue after such price corrections and whether they offer opportunities.
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ISIN: DE000A161N30 , DE000TUAG000 , CA74979J4072
Grenke: Here is what happens after the scandal
Grenke is a success story as a provider of financing services for leasing. The Company from Baden-Baden has been growing for years. But when reports of possible balance sheet falsification were launched a few months ago, the stock took a nosedive. Since then, the share price has not fully recovered. Still, Grenke itself cannot be blamed. The Company quickly turned itself in and hosted conference calls, hired independent auditors, and reorganized to shed more light on subsidiary companies and other associates. Most recently, thanks to an unqualified opinion from the auditors at KPMG, the Company was able to break free - the share price rose by around 20% and is currently trading around EUR 38. Before the accusations, the share price had reached EUR 55.
As long as the critics around the British investor Fraser Perring do not follow up, the scandal could be over for Grenke. And the share price? It could develop further potential. Important resistances on the way up lurk between EUR 40 and EUR 41. If the share price manages to rise above this level in the next few days, it could generate additional momentum. However, how much confidence the scandal has destroyed will only become apparent in a few months. That is, if the share price is unable to return to the level it was at before the accusations.
TUI: Is the travel boom falling apart?
The TUI share is also a comeback story. Still at the bottom a year ago, the share has since put a return of almost 150% on the floor. Thanks to the intervention of the German government, TUI's bankruptcy is off the table. As vaccination success is also increasing in Europe, TUI shareholders are justifiably hopeful of a good summer season. But how much of this success is already priced in? The discussion surrounding digital proof of vaccination in Germany shows that the old freedom is by no means as self-evident as some investors brashly assume.
In Germany, unlike in Sweden, for example, vaccinations have not been digitally recorded. Millions of people will have to go back in early summer with their little yellow vaccination card - and register their vaccinations digitally. As if this process were not absurd enough, people in Germany are also arguing about its proper form. Nor has a suitable app yet been commissioned. As German Health Minister Jens Spahn has already indicated, federal government apps that handle sensitive data must be planned with extra care. It should be known in the 15th month of the pandemic what German diligence can do. Vacations are not yet safe. Many travelers could give up in exasperation and travel spontaneously. For TUI, that carries the risk of negative surprises.
RYU: "Get up when you are down."
Shareholders of Canadian fashion and lifestyle provider RYU also received a negative surprise. Just recently, the Company, which aims to achieve sales of CAD 100 million by 2025 at the latest, canceled its growth financing in the form of a convertible bond. The reason: poor market conditions. The share then crashed and is trading around EUR 0.05 in Germany, which corresponds to a market capitalization of about EUR 9 million. RYU stands for "Respect Your Universe" and impresses with sporty yet fashionable clothing and accessories. Anyone who wants to be casual and stylish at the same time between home office, gym and a meeting with friends can take a closer look at their fashion. At the end of last year, numerous products in RYU's stores were sold out. The brand is well received in the US and Canada.
RYU is constantly breaking new ground, especially when it comes to marketing. The Company has hired an agency to provide product placements in series and films. Since RYU's products have a high recognition value due to their simplicity, the strategy could work. RYU is also involved in the sponsorship of athletes and other influencers. CEO Cesare Fazari has set his Company the goal of growing positively by the end of the year. In the medium term, expansion into Europe could also be on the cards. RYU's stock is currently down; however, both RYU's brand and products are good. Long-term thinking shareholders who are used to managing risks via position size may take a closer look at the stock. Starting from the current level, eruptive breakouts are possible at any time.