K+S, Globex Mining, Barrick Gold - Commodity stocks: Make money now

K+S - Quarterly figures better than expected

The fertilizer and salt producer K+S generated revenues of EUR 988 million in the first quarter of 2024, corresponding to a decline of 18% compared to the same period of the previous year. Operating earnings (EBITDA) fell to EUR 200 million, while adjusted free cash flow almost reached the previous year's level at EUR 111 million. Despite the decline in revenues and earnings, K+S exceeded market expectations, as consensus estimates were for revenues of EUR 904 million and EBITDA of EUR 165 million. The Company is setting optimistic forecasts for the full year 2024.

The Company confirms that there are no signs of an oversupply in the global potash market. The Executive Board expects EBITDA of EUR 500 to 650 million and at least break-even free cash flow for 2024. These forecasts are based on stable demand for fertilizer specialities and a solid European business, which made a decisive contribution to the year's successful start. The investments of EUR 600 million in the Werra plant in the coming years, therefore, make sense.

CEO Dr. Burkhard Lohr expressed his satisfaction with the development and highlighted the positive effects of the strong European business and the high proportion of fertilizer specialities. These factors increase the probability that EBITDA will be closer to the upper end of the forecast range. Nevertheless, uncertainties remain due to outstanding potash supply contracts with China. The majority of analysts recommend holding the share. Only JP Morgan recommends the share as a "Buy" with a price target of EUR 19.00. The share is currently trading at EUR 13.37.

Globex Mining - Broad portfolio and still undervalued

In the course of the current commodities boom, which is largely driven by the need for new technologies, we are experiencing a renaissance in the global markets. The sharp rise in precious metal prices is particularly significant, affecting investors and mining companies alike. In this heated environment, Globex Mining, a company with a total of 248 commodity projects, 124 of which are focused on precious metals, occupies a prominent position. In addition, the portfolio includes non-ferrous and polymetals as well as specialty metals and rare minerals, which are of great importance for high-tech industries such as electromobility, renewable energies and advanced technologies.

With a business model based on acquisitions, development, optioning and divestment of mining projects, Globex is well-positioned to capitalize on the continued demand for commodities. The development of the projects is undertaken by other companies, which secure an option on individual projects from Globex. In return, the Company receives cash, shares, options and royalties as soon as a project goes into production. Due to the large number of properties under option, there are constantly new updates. Most recently, Cartier Resources announced new drill results from the Nordeau property, with results of up to 13.2 g/t gold reported. If Cartier goes into production, Globex will receive a 3% metal royalty.

The strong management under CEO Jack Stoch, the many years of industry knowledge and a very good financial position have ensured that Globex's portfolio has grown strongly in recent years. In 2020, the number of projects was 189. The growth is driven by revenue alone, and the Company has neither debt nor has issued new shares to dilute shareholders. Cash and cash equivalents currently amount to more than CAD 20 million. Another plus point is the Company's focus on its presence in North America and Germany. The share, which was still available for less than CAD 0.80 in mid-March, has recently made significant gains and is currently trading at CAD 1.07. This gives it a market capitalization of around CAD 59 million.

Barrick Gold - Stable quarterly figures despite challenges

Barrick Gold published its results for the first quarter of 2024 on May 1. Despite a slight decline in gold production of 1% to around 940,000 ounces compared to the same period last year, the Company showed a solid financial performance. Revenue increased by 4% to USD 2.75 billion, driven by an increase in the average gold price from USD 1,902 to USD 2,075 per ounce. CEO Mark Bristow emphasized that despite the challenges, such as the delayed ramp-up of the Pueblo Viejo mine, the Company's long-term outlook remains robust, particularly with regard to the planned growth projects.

Demand for copper is growing steadily due to the boom in the renewable energy and electric vehicle sectors. Barrick plans to meet this growing demand by investing heavily in new mining projects such as the Reko Diq in Pakistan and the Lumwana Super Pit in Zambia. These projects are expected to significantly increase the Company's copper production over the next few years. This development is critical as current forecasts predict a looming copper shortage by 2035 if the discovery and development of new deposits is not accelerated.

Barrick is committed to organic growth through the development of new mines and the expansion of existing ones. The expansion of the Pueblo Viejo mine and the restart of the Porgera mine will help to increase production capacity and reduce costs in the medium term. In addition, Barrick plans to further strengthen gold production through projects such as Goldrush and Fourmile. CEO Bristow emphasizes the need to invest in the discovery and development of new resources. This is necessary because acquisitions alone will not be enough to overcome the future challenges in the copper market. The share is currently trading at USD 17.89.

The battle for raw materials is in full swing. China is particularly hungry for raw materials. Some experts have already declared a commodity supercycle. K+S was able to exceed market forecasts despite declining sales and declining profits and is optimistic for the year as a whole. Globex Mining benefits from high commodity prices, has a diversified portfolio, and remains undervalued due to its strong financial position and strategic project selection. Barrick Gold reported stable quarterly figures despite challenges and is focusing on organic growth through investments in new mining projects. In this dynamic environment, all three companies offer different but promising investment opportunities.