April 25th, 2022 | 13:22 CEST
Mutares, Edgemont Gold, Barrick Gold - Inflation soon to exceed 10%! What to do?
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"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
Mutares - Dividend yield of 10% in 2023?
Most recently, Mutares Holding reported a 52% increase in profits for the past fiscal year 2021 to EUR 50.7 million (previous year: EUR 33.4 million) or EUR 2.46 after EUR 2.16. Sales increased at a slightly stronger rate of 58% to EUR 2.5 billion. The Company has a transaction pipeline with a sales volume of around EUR 11 billion. At the Annual General Meeting to be held on May 17, the Executive Board and Supervisory Board have proposed the payment of a dividend of EUR 1.50. This dividend amount consists of a basic dividend of EUR 1.00 per share in line with the communicated long-term dividend policy and an additional "performance dividend" for the financial year 2021 of EUR 0.50 per share.
The listed private equity holding company acquires small to medium-sized companies and parts of groups in transition situations based in Europe which show clear potential for operational improvement. After stabilization and repositioning, the portfolio companies are then sold again. Characteristically, Mutares follows an active approach. The investor actively supports and develops the portfolio companies with its own investment and expert teams and carries out strategic add-on acquisitions.
With the strategy pursued, high returns beckon. The aim is to increase the capital employed by a factor of 7 to 10. Shareholders are promised dividends of 1.8% to 2.2% of Group sales in the medium to long term. Guidance for the current fiscal year is for consolidated sales of at least EUR 4 billion and a profit of EUR 72 to 88 million. Group sales of at least EUR 5 billion are envisaged for 2023. The outlook for 2022 and 2023 suggests that the Group will soon pay a dividend of EUR 2 or more per share. Investors can still buy the stock today for around EUR 23.
Edgemont Gold - Good breeding ground for upward movement
The Canadians are focusing on the Dungate copper-gold porphyry project in British Columbia. As an exploration company, Edgemont characteristically operates in an early lifecycle phase with the search and identification of mineral deposits. It is associated with many opportunities but also risks. A few weeks ago, the publication of drilling results led to a massive slide in the share price, which means that the Company is currently valued at only around CAD 1 million.
Investors should not overestimate this price drop. As a snapshot, what happened can be attributed to overly high market expectations regarding the Company's copper drilling data. Proven copper concentrations were recently only in the range of 0.2%. In contrast, the market completely ignored the drill data on gold mineralization (27m of gold grading 0.44 g/t, including a 6m interval of 1.26 g/t gold).
Also entirely ignored by investors was that this drill program provided further insight into the geology and location of the deposit. Stuart Rogers, President and CEO of the Company, emphasized that the Phase II drill program would be started soon based on the data obtained. Thus, the tide could quickly turn again for the micro-cap. The courageous are following the developments intensively and are already taking action. Several mines are located in the mining region. In addition, the general conditions speak for rising prices of precious and industrial metals.
Barrick Gold - Rock solid
Gold and copper are the raw materials at the center of activity of the Canadian mining giant. As the name suggests, the focus of the Toronto-based Company is on the precious yellow metal. Barrick is the world's second-largest gold producer and holds stakes in 14 gold mines, including six tier-one gold assets, i.e. mines that produce at least 500,000 ounces of gold p.a. over a period of ten years or more. Geographically, the most important location is the United States (US state of Nevada).
The Group generates around 10% of its revenues from copper, an elementary metal for the growth of electromobility. The Company's copper mines are located in Zambia, Chile and Saudi Arabia. Overall, the assets are of high quality and have long operating lives.
The Company achieved record profits in the past fiscal year due to high raw material prices and production volume. Shareholders benefited through increased dividends. Analysts believe the shares have a further upside potential of 20% despite the good performance. Gold, in particular, has proven to be a safe haven in times of high inflation.
Tangible assets provide the most effective protection against high inflation. Historically, an investment in gold or gold shares has proven itself well in these phases. The heavyweight Barrick is a good choice here. If you are willing to invest in a turnaround candidate from the micro-cap sector, the gold and copper explorer Edgemont is a good choice. Dividend hunters should take a closer look at Mutares.
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.
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