08. February 2021 | 09:48 CET
Lang & Schwarz, Deutsche Rohstoff, NanoRepro - Top Picks: German Small Caps!
Many studies show that small listed companies, so-called small caps, generate higher returns over more extended periods than larger corporations. A broadly diversified small-cap portfolio, when combined with mid and large caps, increases returns and reduces risk in the overall context. Thus, small caps should not be a side issue when it comes to investing. We present three exciting and promising German small caps.
time to read: 4 minutes by Carsten Mainitz
LANG & SCHWARZ AG - Records continue to be set
At the beginning of the year, Lang & Schwarz AG reported phenomenal figures for the fourth quarter and the past fiscal year, with the stock trading in the EUR 75 range. The core business of stock exchange trading continues to boom. In addition to on-exchange trading, the subsidiary Lang & Schwarz Tradecenter also offers off-exchange trading via its own platform LS-X, which has established itself as the No.3 in Germany.
Last Monday, Lang & Schwarz published the results of its trading activities (net interest income plus net commission income and trading profit) for January. This number increased to EUR 20 million and was almost seven times higher than the previous year's figure. The record result is even more impressive when viewed in relation to other data. With the January result, the Company has exceeded the trading activity of the entire opening quarter of 2020 by almost 40%. And the Company has already brought in more than 70% of the record result of Q4 2020!
No wonder, then, that the stock gained over 30% in the past week alone, reaching a new all-time high. At prices of around EUR 130, the Company is now valued at a good EUR 400 million. As long as the stock markets remain so sunny and carefree, investors in Lang & Schwarz shares will outperform the market. However, it is also clear that growth trends cannot continue exponentially into eternity. From a fundamental analytical perspective, the stock is not overvalued, even at the new all-time high, given the earnings achieved in 2020 and the outlook, which makes another record year likely.
DEUTSCHE ROHSTOFF AG - With new oil wells, the Company's cash register is ringing
Deutsche Rohstoff is the only pure commodity share with German origins on the national stock market. The Mannheim-based Group identifies, develops and sells attractive raw material deposits in North America, Australia and Europe. For some time now, the focus has been on developing oil and gas deposits in the US. Acting opportunistically, the Company has proven good timing in the past when disposing of gold projects and US oil projects. Often underestimated are the mining projects and investments that the Group holds in its portfolio. In particular, investors should look at Almonty Industries, in which the Mannheim-based Company has a stake. Almonty is currently developing the largest tungsten mine outside China and has excellent chances to establish itself as one of the most important global producers of the strategic metal.
Last Friday, Deutsche Rohstoff announced an update on US oil Company Cub Creek Energy with the immediate start of drilling (Knight well site, just west of the Olander well site). Plans call for up to 12 horizontal wells with 2.25 miles of horizontal length. The Corporation expects production to commence in the fourth quarter of the current year. The cost of the drilling program is estimated to be up to USD 60 million, of which Cub Creek will be responsible for approximately 90%. Financing will come from cash flow generated, a credit line provided, and corporate funds. There was also good news from the Olander drilling site. Since the beginning of January, production here has started up again in the wake of rising oil prices. By the end of January, production had already reached almost 4,000 BOE. The Group expects a further increase in February.
While in the first phase of the Corona pandemic, it looked as if the world would no longer demand oil; the situation has eased again. Rising crude oil prices and tightening forward curves will gradually demonstrate to investors the value of Deutsche Rohstoff's oil projects. Forward-looking investors have already bought in or should do so soon.
NANOREPRO AG - Is the share already too expensive or still too cheap?
The third stock today is much more speculative than the two previous stocks. The share price already contains some advance praise. Also, the Company's history has shown that several potentials have not been realized. The volatility of the share should also not be underestimated. But at least for traders, these are always exciting conditions. Experts in chart technology even see a short-term chance of a price gain of more than 40%.
Marburg-based NanoRepro AG develops, produces and sells medical self-tests and has been one of the innovation leaders in this growth market for years. The portfolio in self-diagnostics currently comprises 25 products, including pregnancy tests, colorectal cancer screening tests, various allergy tests and an HIV test.
In early January, the Company announced that it had submitted a Corona antigen test for home use to the relevant authorities. This test is saliva-based and gives a result after about 15 to 20 minutes. However, the Company did not say when an approval decision could be expected. If the Marburg-based Company succeeds in launching the Corona test for end consumers, the share will face a revaluation. In the event of a failure, the share price could suffer significant losses.