January 20th, 2021 | 09:58 CET
Lenovo, Triumph Gold, K+S: Are the stragglers jumping now?
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"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
Lenovo: What's next for the home office stock?
PC manufacturer Lenovo showed that the pandemic did not affect all industries equally and impressed the market with a record quarter between July and September. The reason is probably also because consumers still bought a lot of equipment for the home office in 2020, and Lenovo was well-positioned for it with its products. At the same time, the Company streamlined itself in 2020 and worked on its cost structure, among other things. 2020 has changed a lot for computer manufacturers. While PC systems and accessories were relatively slow sellers in the years before, sales developed rapidly in 2020. Especially with peripherals such as webcams, and it is still noticeable today that margins have even increased. Everyone needs PC accessories, and companies have correspondingly higher pricing power.
In contrast, things went less well for Lenovo in 2020 in the sectors of cloud and smartphones. Hardly any customers today think of smartphones when they hear the brand "Lenovo." The ship seems to have sailed, and Samsung and even Xiaomi are uncatchably ahead in the Android phone segment. However, this is not a disaster for Lenovo shareholders - Lenovo is too strongly positioned in the other hardware segments. Another special price boost for Lenovo is that business in China is solid with more than 20% of sales. Lenovo also generates more than a fifth of its sales in the rest of the Asia-Pacific region. Coupled with the low valuation of a P/E ratio of around 12, these are good conditions. The stock has already made significant gains on a one-month horizon and could stand a setback. Nevertheless, the fundamental situation is promising.
Triumph Gold: Financed gold prospector with Newmont as a shareholder
Triumph Gold is a stock that has not yet put together a brilliant price rally in recent weeks. The Company has properties in the Yukon in Canada and is prospecting for gold there. The Canadian Freegold Mountain project, in particular, is considered promising. In 2020, the Company impressed with outstanding drill results, which caused the share price to rise rapidly: Between March and August 2020 alone, the share price more than tripled. In the meantime, however, the share price has corrected more than 50% again.
Since Triumph's projects are promising, the Company has a good name in the industry - after all, mining giant Newmont has a 12.8% stake in Triumph - and the share price has come back, investors with an affinity for gold can make a note of the value. In recent days, the price repeatedly jumped for a short time and then calmed down again. Triumph Gold is sufficiently financed for the upcoming drilling program and could explain why the value has currently bottomed out.
K+S: Is history repeating itself?
A similarly explosive situation as with Triumph Gold is currently evident with the German standard stock K+S. Some time ago, the Company divested itself of its US business, which had become a burden over the years. At the same time, potash prices rose. During this development, the share has freed itself in the long term - at least from a chart perspective. If you look at the share price performance over one year, the former crisis share only shows a small loss. If it manages to rise above the EUR 10 mark, there will soon be room for dynamic development. Price drivers could be familiar factors such as demographics or increasing prices for agricultural raw materials.
During the last commodity boom in 2008, K+S also benefited from rising prices for agricultural commodities. In the end, the share even stormed the DAX. Although K+S is still far away from this today, the value could soon be on the watch lists of opportunity-oriented traders, given its catch-up potential. Whether K+S or Lenovo: There are still moderately valued blue chips with potential. With second-line stocks, such as the gold developer Triumph Gold, the opportunity appears favorable in the mirror of the price trend during the past year. Those who shy away from investments in hot trend stocks will currently find a favorable risk-reward profile in stragglers.
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