27. May 2021 | 07:50 CET
Kodiak Copper, ThyssenKrupp, BYD: Three trends in one share
Copper is the metal of the moment. There are several reasons in favor of copper. Firstly, copper is benefiting from the global economic recovery following the end of the pandemic. The industrial metal has always been the primary beneficiary when infrastructure is invested in or otherwise built. It is precisely in this way that countries want to boost their economies after the pandemic. At the same time, there is a dynamic demand from the e-car industry. E-cars and charging infrastructure, none of that works without copper. And last but not least, inflation is getting to us - the Bundesbank is already expecting inflation rates beyond the 4% mark. Again, commodity prices tend to benefit.
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ISIN: CA50012K1066 , DE0007500001 , CNE100000296
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Kodiak Copper: This copper stock is on many watchlists
Speculative investors who want even more leverage on the already dynamic copper price can take a closer look at Kodiak Copper's stock. Kodiak Copper caused a stir last year with spectacular drilling results. The stock consolidated until the beginning of the year and has now picked up speed again. As recently as April, the Company succeeded in acquiring the Axe concession area, which complements the previous site and whose exploration is to be prepared and initiated this year. Drilling is currently underway on the current core area of the MPD project. From the second quarter onwards, additional drilling equipment should ensure that drilling proceeds even faster. Shareholders can therefore expect newsflow.
The effect that good drilling results can have on the share price of exploration companies was impressively demonstrated by Kodiak Copper last September: the share price climbed from EUR 0.39 to EUR 2.10 within one month. The subsequent financing round caused the share price to consolidate and hover around the EUR 1 mark. Kodiak has been back in the swing of things for a few weeks now. The interim high of EUR 1.36 was overcome and the share price even briefly jumped above EUR 1.50. The most recent consolidation could mean that the share price will continue to rise as the share may have gained momentum for more. The Company is likely to be on the watch list of both speculative investors and large mining companies. Drill sections over several hundred meters with grades of up to 0.53% copper speak a clear language. Anyone looking for leverage on the copper price can hardly avoid Kodiak Copper.
ThyssenKrupp: The principle of hope reigns here
When you hear copper, you inevitably think of steel. ThyssenKrupp's stock went through many lows in 2020. Fortunately, the Company's restructuring has already borne fruit and ensured the first quarterly profits in the new fiscal year. It is striking that not the former core business around steel, but the automotive and industrial components businesses are among the best performing at ThyssenKrupp. The passenger elevator business has already been sold. The first signals from the latest quarterly figures suggest that things could change for the better for ThyssenKrupp in the full year.
With that said, the share price has hit rock bottom. Although the stock has gained significantly over the past year, it has lost 16% in the past three months. From a chart perspective, too, the stock does not look very promising at present. Many resistances still have to be cleared out of the way before the stock can return to an upward trend from a long-term perspective. The share is currently uninteresting.
BYD: Jack of all trades with competition
One of the most significant growth drivers for the copper business is electromobility. Here is where Chinese automaker BYD has made a name for itself. Many years ago, BYD was more a battery manufacturer than a carmaker and was often derided by its premium brand competitors. But the Company has morphed and now offers its semiconductor division in addition to its batteries and fancy e-cars. At a time when chips are scarce, the arrogance of many German premium manufacturers is likely to have evaporated when they look to China. BYD is perfectly positioned and does not have to fear supply bottlenecks. On the contrary, IPOs of the subsidiaries could even bring further capital into BYD's coffers and make the Company interesting as a supplier.
After a brilliant rally last year, the BYD share has corrected in the past three months. The share has been on the rise again for a week now and is up 10.7% over five trading days. The final turnaround could be completed in German trading if the share breaks through the EUR 20 mark. However, BYD is not without risk either: German premium brands, such as VW, have declared an electric offensive and should soon catch up with the competition in terms of technology as well. The German premium brands already have a better image. BYD is, therefore, not a foregone conclusion. Those who want to invest in electromobility, infrastructure, and inflation independently of brands can take a closer look at the dynamic copper hope, Kodiak Copper.