Knorr-Bremse, Power Metallic Mines, Rational: A Look Behind the Scenes—and Up to 150% Upside Potential

Firsthand Information

How are price targets actually determined? Mathematical models provide the framework. But the deciding factor is often something else: personal contact with management. This is where professionals have a real advantage, since retail investors are usually denied access to the key investor conferences. Of course, executives are not allowed to reveal any price-sensitive news there. But if you listen closely, you will learn more than a quarterly report reveals. How confident is the CEO in his forecast? Does the CFO seem calm or nervous? Thanks to video conferencing, retail investors can now gain such insights as well. For example, on Wednesday, October 7, at the 20th International Investment Forum (IIF). Between 9:55 am and 8:00 pm, up to 20 companies will present themselves live. Among them: two established MDAX-listed corporations and one of Canada's most exciting commodity stocks. Participation is free; investors can register via this link:

https://us06web.zoom.us/webinar/register/WN_KxUBth5WSYagM_MwU_P4fw#/registration

Knorr-Bremse: Tailwind After the Roadshow

Knorr-Bremse was on the road throughout September. During the roadshow, management sought to build confidence among investors in the US and at conferences in Germany. By the end of the month, three "Buy" recommendations from renowned firms had followed. Deutsche Bank set the price target at EUR 118, Berenberg at EUR 125 EUR, and Warburg Research as high as EUR 131. Based on the current price of EUR 101.70, this represents upside potential of 16 to 29%. Only JPMorgan remains cautious at EUR 108 and recommends "Hold".

The business model is easy to understand and hard to copy: Braking systems and other safety-critical technology for trains, trams and trucks. In the first half of the year, revenue rose slightly to EUR 4.08 billion. Operating profit before interest and taxes increased by 13.7% to EUR 566 million. Free cash flow grew by as much as 84%. As a result, the Executive Board raised its full-year forecast. Revenue is now expected to reach between EUR 8.1 and 8.3 billion, with the operating margin projected at 14.0 to 14.5%, up from 13.0% in the previous year. The only downside: Order intake was slightly below the previous year because the rail business generated fewer orders. Knorr-Bremse will present at the IIF at 10:30 am CEST.

Rational: A Classic on Sale

Rational also sought dialogue with investors on several occasions in September. No wonder: The stock has been under pressure for months and is in a downward trend from a technical analysis perspective. Yet Rational has long been one of the most popular and most expensive stocks on the German market. The reason lies in its business model. For 50 years, the Landsberg am Lech-based company has been the global market leader in combination steamers—professional ovens that cook with hot air and steam. Its portfolio also includes the iVario multifunctional roaster. Cafeterias, hotels, and restaurant chains around the world use them for cooking. Revenue and profits have risen consistently for decades. In the first half of the year, revenue grew by 6% to EUR 641.5 million, and earnings per share rose by 10% to EUR 11.64. However, this was aided by a refund of US tariffs totaling approximately EUR 14 million. For the full year, the Executive Board expects revenue growth in the mid- to high-single-digit percentage range, as well as an operating margin of 25 to 26%. Uncertainties remain regarding tariffs, logistics costs, and raw material costs.

Following the sharp decline, the valuation now appears almost reasonable. With a price-to-earnings (P/E) ratio of 23 for the current year, Rational is roughly on par with Knorr-Bremse. Based on estimates, the dividend yield exceeds 3%. The average price target set by analysts is just under EUR 830; Bernstein Research even sees EUR 1,070 as achievable. At the current price of EUR 570.50, this corresponds to upside potential of 45 to 88%. Rational is scheduled to present at the IIF at 11:30 am CEST.

Power Metallic Mines: Treasures from Québec

In addition to German heavyweights, foreign companies that are still virtually unknown in this country are also appearing at the IIF. Power Metallic Mines from Toronto is one such example. The company is an explorer: it searches for and develops mineral deposits but does not yet produce. Revenue and profit therefore play no role. What matters is what lies beneath the ground. The Nisk Project in the province of Québec contains unusually high concentrations of copper, palladium, platinum, gold, silver, and nickel. Nearly all of these metals are considered critical raw materials in Canada, the US, and the EU. They are found in military equipment as well as in electric vehicles, power grids, and data centres.

In early September, the company released an initial resource estimate for the Lion Zone, the centrepiece of the Nisk Project. The stock market reacted with disappointment because the quantity fell slightly short of expectations. A few weeks later, however, drilling at a depth of nearly 800 m struck even richer ore. "Lion's quality has been proven. Now it is a matter of proving its scale," says CEO Terry Lynch. The company has prominent backing: commodities super-investor Eric Sprott holds a stake, and mining legends Robert Friedland and Rob McEwen are also on board. Lynch will explain why he believes in this breakthrough at the IIF at 4:30 pm CEST.

The next milestones include a potential listing on the US growth stock exchange Nasdaq and an initial PEA in the first half of 2027. GBC Research, co-organizer of the IIF, sets the price target at CAD 3.00. From the current price of CAD 1.20 (EUR 0.74 on German exchanges), that would represent a premium of more than 150%. Not yet factored into the estimates is a groundbreaking deal in Saudi Arabia that Lynch recently brokered: Through its subsidiary Power Metallic Arabia, the Canadian company has secured a license in the Jabal Sayid Belt—a region considered highly prospective for copper, gold, and zinc. Jabal Sayid is also the name of a world-renowned copper mine operated by Barrick Mining as a joint venture with the Saudi mining company Ma'aden.

One Day, 20 Exciting Stories

An industrial leader with fresh momentum, a stock that has fallen sharply, and an explorer with ambitious plans: On October 7, investors can see for themselves whether the published price targets are realistic. For years, this kind of behind-the-scenes access was largely reserved for professional investors. Now, the general public can watch the IIF presentations live and form their own opinions. Knorr-Bremse, Rational, and Power Metallic Mines are just three of up to 20 exciting companies presenting live next week. Participation is free; click here to register:

https://us06web.zoom.us/webinar/register/WN_KxUBth5WSYagM_MwU_P4fw#/registration