April 22nd, 2022 | 10:06 CEST
Investments of yesterday for tomorrow: K+S, Globex Mining, Netflix
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
K+S: Bread for the world
As a fertilizer producer, K+S is a winner in the current circumstances. The share price has multiplied in recent months. With the war in Ukraine severely disrupting food production, the focus is now on making agriculture as efficient as possible in the rest of the world. K+S is an important supplier for this. The Company has been making profits again for some time. The turnaround and good market conditions are coming together for K+S.
Even before the outbreak of the war, K+S was optimistic and wanted to expand its existing business and open up new areas. The fact that these plans are now receiving so much tailwind from the market as a whole is a fortunate coincidence for K+S. But the favorable situation has already been comprehensively rewarded by the market. The share has made considerable headway, and a correction is imminent. Fundamentally, however, K+S is well-positioned to generate good figures beyond 2022.
Globex Mining: 200 raw material projects in safe North America
While the K+S share tends to be rather expensive, the Globex Mining share has not yet gained as much ground. Globex Mining is a Canadian company with over 200 commodity projects valued at the upper double-digit millions. What at first glance appears to be a colorful general store has a system: Globex has sold projects again and again in the past years. Currently, the Company's portfolio includes copper, nickel, lead, gold, silver, platinum, palladium, manganese, titanium, iron, molybdenum, lithium, cobalt and rare earths.
The projects are in various stages of development. They range from properties where only some rock samples have been taken to projects for which feasibility studies already exist. Examples are the Authier Lithium Royalty (resource and feasibility) or the Rocmec1 Gold Mine (resource estimate 570,000t gold at 6.32 g/t ). Globex Mining's share price has picked up recently, but the sheer mass of projects may not yet be adequately valued. Even a few exits at current market conditions could be a catalyst for the share price.
Netflix: The tension is out
While companies like K+S and Globex Mining focus on tangible assets, Netflix is all about digital content. For about a decade, this approach was considered the most promising - after all, digital products can be multiplied, and business models scaled that way. The higher the number of subscribers, the lower the proportionate costs. It is not surprising that Netflix has invested billions of dollars in new series and films over the years - after all, the Company was on a growth path. Recently, Netflix lost subscribers for the first time in years. We predicted this setback here a few weeks ago - the pandemic is as good as over, and people want to get out - even if the cinema costs as much for an evening as Netflix does for an entire month!
In the stock market, too, the conviction is gaining ground that digital consumption and hyped tech giants, such as Netflix and also Peloton, are losing ground as the economic foundation erodes. In large parts of the Western world, this foundation still consists of industry and the middle class. When people have hardly any money left in their wallets due to sharply rising prices and when companies reach their limits due to sputtering supply chains and high purchase prices, needs shift to essentials. In the end, it will be tangibles and commodities instead of digital subscriptions.
As scarcity and rising prices are also increasingly impacting the real economy and people are beginning to fear for their jobs, investors should focus less on "the next big thing" and more on proven problem solvers. Energy producers and suppliers of fertilizers and seeds are currently hitting a nerve in the market. Commodity companies are also in demand. Firstly, because of scarcity, and secondly, because of the trend toward diversification of supply chains. Since the pandemic and the Ukraine war, it is no longer practical for certain raw materials to come predominantly from one country. Suppliers from safe regions, such as Globex Mining, which operates mainly in Canada and the US, could score points.
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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