January 24th, 2022 | 10:13 CET
Mini P/E, dynamic growth and ESG profile: Varta, Saturn Oil + Gas, Gazprom
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Varta: Why the share is outperforming and what this means
The Varta share is very popular with German private investors. Indeed, the combination of a German quality brand and modern technology sounds extremely convincing. But how much potential is still in the share? After many advance praises, the value has come to rest. Even analysts see price targets more in the vicinity of the EUR 100 mark, while the share price at times already focused on the EUR 200 mark. Battery technology shows that the old image of a walker with a dog on a leash is a perfect analogy for the stock market. The walker represents the real economy, the dog the stock market prices. As we can regularly observe in the park, dogs tend to either escape from their walker and tug on the leash or hardly move from the spot, so the walker has to wait for the dog. So what does this mean for the stock market?
When it comes to certain future technologies, share prices behave like a dog that smells a sausage a long way off - they rush ahead of the real economy. As legislators around the globe have done everything in recent years to promote renewable energies and related technologies, valuations are already high for established players in these fields. The statistics also show that some of the most successful stocks of the past year are trading well below their highs.
Saturn Oil & Gas as an exciting insider tip
The opposite is the case in sectors that are supposedly among the losers of climate change, such as the classic energy sector. Companies such as Saturn Oil & Gas are currently experiencing extremely dynamic growth, are generating stable earnings and are only valued at around twice their earnings. By way of comparison, the price/earnings ratio of Varta is about 25 times higher at 50. Resourceful investors who pay attention to fundamental data can take advantage of this and invest selectively in high-quality stocks from traditional sectors. Saturn Oil & Gas multiplied its production last year after it managed to start negotiations to buy an oil field at oil prices below USD 50 and put together a financing package that primarily consists of debt. Within the next 2.5 years, Saturn aims to have repaid the loans. That should also be possible because Saturn's oil production in Canada is largely hedged against price fluctuations.
Advantages over Gazprom & Co.
In addition to its growth story and low valuation, Saturn Oil & Gas also impresses with its ESG profile. The Canadian Company adheres to high environmental standards and goes beyond them in many areas. For example, there are plans to renaturalize used oil wells after being exploited extensively. Saturn also offers internships for young women to encourage more women to take jobs in the Canadian oil and gas industry. A glance at the extremely young team at Saturn Oil & Gas shows that things are different from those at industry giants such as Gazprom. On February 17, interested investors will again have the chance to meet CEO John Jeffrey and ask questions at the International Investment Forum - IIF. In view of the Company's prospects and other general conditions, the stock is likely to be on the lists of many investors who want to bet on substance with perspective in these times.
While Varta is already expensive, energy companies such as Gazprom suffer from other problems. In the case of the St. Petersburg-based group, these include the Ukraine conflict and the latent threat of sanctions. Saturn Oil & Gas is in the clear in all this: The Company is valued even lower than a classic energy company but at the same time has a clearly visible ESG profile.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
For this reason, there is a concrete conflict of interest.
The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.
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