15. February 2021 | 10:00 CET
Linde, Royal Helium, Siemens Healthineers: Which stocks are stepping on the gas?
When it comes to commodities, most investors think of tangible elements, such as copper and gold, or at least liquid substances, such as crude oil. But gases are also a lucrative business. Companies such as Linde have been proving for years that investors can make money from gases. We present business models around gas that are rock solid and anything but volatile.
time to read: 3 minutes by Nico Popp
"[...] We expect the first three wells to be drilled, cased, completed and tested by the second week of March [...]" Andrew Davidson, CEO, Royal Helium Limited
Linde on the right track
Whenever gases are needed in the metalworking industry, the chemical industry, medicine or even by food manufacturers, the specialists at Linde are the first port of call. Originally started more than one hundred years ago as a company for ice machines, Linde is now valued at EUR 114 billion on the stock exchange. The Group's latest figures were positive: although sales fell by 5.6% after nine months of the fiscal year, profits still rose slightly by 0.3%. As the market had also expected a crisis result for Linde, the figures were well received.
Investors are hoping that a comeback of the global economy after the pandemic will lead to Linde also taking more money for its products. In addition to gases, Linde is also active as a hydrogen producer. To maintain this market position in the future, further innovations, also in the direction of ESG, are necessary - the competition does not sleep. As Linde is in a restructuring phase, the outcome of which is not yet clear, investors should be cautious when entering the market. However, the latest interim results point in the right direction.
Royal Helium: The share for hot weeks
The latest news from the Canadian helium Company Royal Helium also point in the right direction. The Company recently announced that it had completed the second of three wells for the noble gas, with production tests to follow. Initially, the Company had announced that it would have completed all work in about two weeks. However, Royal Helium points out that the production tests are likely to take longer due to a large number of test sections. In the market, Royal Helium's stock is taking a breather. After the Company announced the current drilling in mid-January, the share price rose rapidly from less than EUR 0.30 to over EUR 0.50. In the meantime, the value has found a bottom just below EUR 0.45.
Helium is a critical element due to its use in medical technology and the manufacture of computer chips. It is not recyclable and typically an expensive raw material. Royal Helium operates with an experienced team in a classic production area in the Canadian province of Saskatchewan, which is characterized by high helium concentrations and good conditions for commodity companies. The share is a highly speculative investment, as investors are currently focusing solely on the current drilling program results. Investors looking for a dynamic share may want to add the stock in a calm market phase.
Siemens Healthineers: Uncertainty ahead
At first glance, the Siemens Healthineers share also looks attractive. The Siemens spin-off covers the medical division, primarily imaging equipment, such as X-ray machines or even computer tomographs. It also includes gases. Looking at the figures for the first nine months of the fiscal year, it quickly becomes clear why Siemens has put its subsidiary on its own feet: Sales fell and profits slipped as part of the nine-month figures. In 2020, the Company bought cancer specialist Varian. This measure was financed with a capital increase.
Further capital measures are conceivable in the medium term. However, the latest quarterly figures have raised hopes on the market, showing a jump in profits. The Company maintained the forecast for 2021. Partly because of these promising figures, the share price rose by around 25% over three months. But will this development continue?
The trend of the past months points upwards, but the Company remains in a difficult phase. The integration of the acquisition and possible further capital measures could cause further uncertainty. For investors, the Siemens Healthineers share is not a must-have - even if the healthcare sector is fundamentally attractive. Those looking for dynamic growth would be better off investing in other stocks. An alternative for speculative investors is the share of Royal Helium.