March 3rd, 2022 | 12:48 CET
K+S, Globex Mining, Barrick Gold - On the road to success
The stock markets will certainly remain nervous for some time to come given the war in Ukraine and Putin's threatening nuclear gestures. But where there is uncertainty and risks, there are also opportunities. The big picture favors commodity investments: precious metals as a crisis currency, battery metals with high demand due to the energy transition, and agricultural commodities. We take a look at shares that offer good opportunities.
time to read: 3 minutes
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Author:
Carsten Mainitz
ISIN:
K+S AG NA O.N. | DE000KSAG888 , GLOBEX MINING ENTPRS INC. | CA3799005093 , BARRICK GOLD CORP. | CA0679011084
Table of contents:
Author
Carsten Mainitz
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
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K+S - Only one direction
Undeterred, the share of the Kassel-based fertilizer manufacturer is marching forward. With a performance of 130% over the past 12 months, the share has left the MDAX miles behind. The benchmark index even lost just under 4% in this period. And given good underlying conditions and renewed profit increases, everything looks set for a continuation of the trend.
Thanks to high fertilizer prices, the Group is confident of a significant increase in profits in the current fiscal year, despite higher costs for energy, logistics and materials. The Company formulated an EBITDA of EUR 1.6 billion to EUR 1.9 billion as its target range for the operating result - in other words, in a best-case scenario, K+S could double its operating income. This estimate exceeded analysts' consensus estimates. In any case, the experts' recommendations and share price targets have fallen short of the dynamic share price performance in recent quarters.
Recently, the share price has been boosted by optimistic statements from Canadian competitor Nutrien. Nutrien emphasized that the Company could ramp up its fertilizer production in the event of prolonged sanctions against Belarus, one of the world's largest potash producers. The Canadians expect record potash fertilizer sales of 13.7 million to 14.3 million tons in the current fiscal year due to strong demand from farmers and sanctions-related shortages.
Globex Mining - Huge diversified portfolio
The Canadian Company owns an extensive diversified North American portfolio of mid-tier exploration, development and license properties at over 200 projects. Investors can invest via Globex in precious metals (gold, silver, platinum, palladium), base metals (copper, zinc, lead, nickel) and other critical commodities such as rare earths or lithium.
Globex explores on its own account and invests at least CAD 1.5 million each year for this purpose. The core of the strategy is to sell projects for cash, shares or royalties. The high cash balance of CAD 20 million shows that this strategy is working. Most recently, the Canadians announced that they had made a profit of almost CAD 700,000 through a transaction. NSGold Corp. was sold to Atlantic Mining NS Inc., a wholly-owned subsidiary of St Barbara Ltd. In the past, Globex sold the Mooseland gold mine to NSGold and thereby received 1.745 million NSGold shares, which now generated the profit mentioned above at a selling price of CAD 0.40 per share.
Despite the extensive portfolio, the debt-free Canadian Company currently has a market capitalization of only CAD 75 million at a share price of CAD 1.35. Analysts estimate the fair value per share at CAD 2.69. That means doubling potential!
Barrick Gold - Too modest
Fueled by the high gold price, good Q4 figures, and an optimistic outlook for the current fiscal year, the shares of the world's second-largest gold producer have performed well in recent weeks. For 2022, the Canadians raised the prospect of production volumes of 4.2 to 4.6 million ounces of gold and 420 to 470 million pounds of copper. Capital expenditures are expected to range from USD 1.9 billion to USD 2.2 billion. In terms of production costs (AISC), the Group anticipates an increase to between USD 1,040 to USD 1,120 per ounce of gold and between USD 2.70 to USD 3.00 per pound of copper. Depending on where prices and costs move on the bottom line over the year, Barrick may maintain last year's USD 2 billion profit. However, analysts are forecasting a 10% decline in 2022.
However, if one takes a closer look at the guidance, the commodity giant could well succeed in topping last year's profits. The forecasts only assume a gold price of USD 1,700 and a copper price of USD 4.00, significantly below current prices. Other reasons that should contribute to a good share performance are the prospect of a share buyback program of up to USD 1 billion and the more generous dividend policy.
The current environment for investing in commodity stocks is good. Rising fertilizer prices and sanctions make K+S shares attractive. The high gold price speaks in favor of Barrick. Investors can invest in a much more diversified way in more than 200 projects via Globex Mining. Moreover, the share is trading at only half its fair value.
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.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
For this reason, there is a concrete conflict of interest.
The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.
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