26. October 2020 | 09:45 CET
NEL ASA, Almonty Industries, Bayer - Nervousness brings the leverage!
The stock market is restless. Too much uncertainty currently dominates the market. "Crazy Donald" or "Sleepy Joe"? What is the future of the pandemic? Will a hard Brexit with the E.U. follow the British threats? These are the short-term questions that are certainly not likely to ensure peaceful trading on the world's stock markets. However, high volatilities also offer great opportunities. In recent weeks, the Bayer AG share has also been subject to significant fluctuations. Is everything now included in the price, or is the decline continuing? It remains exciting.
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ISIN: CA0203981034 , NO0010081235 , DE000BAY0017
Still under fire
The management of the Bayer Group should be glad when the horror year 2020 is over. One horror report hunts the next. Last Wednesday, the highest court in the U.S. state of California rejected an appeal by the agrochemical and pharmaceutical Company against a first multi-million-dollar glyphosate ruling. It caused further disappointment at the Company's headquarters. The case concerned the first case of Dewayne Johnson, who is suffering from cancer. As recently as July, an appeal court in San Francisco had reduced the damages from USD 289 million to USD 20.5 million. The next option would be to go to the U.S. Supreme Court.
However, as this is only one of more than 120,000 glyphosate lawsuits in the United States, Bayer is aiming for a general multi-billion dollar settlement to bury almost all litigation. In June 2020, Bayer offered USD 11 billion, which was overturned by U.S. judges. The case of Dewayne Johnson and two other lawsuits are not included in this framework.
When does the rubber band snapback
Almost exactly six years ago, the showpiece Company from Leverkusen seemed to have arrived on Mount Olympus. A market capitalization of just under EUR 100 billion meant that the Company was ranked number 1 of all Companies in Germany. At the latest, after the takeover of the already heavily criticized U.S. Company Monsanto, the decline began. Currently, the market value of the former high-flyer is a contemplative EUR 42 billion.
The lawsuits mentioned above have still not been resolved and are causing further uncertainty. It should not be forgotten that the original so successful pharmaceutical business continues to deliver stable sales. Although the Corona pandemic has also created further uncertainty about prospects, the value is currently significantly oversold. A stronger countermovement to the downward trend that has been in evidence since June 2017 at just under EUR 60.00 seems quite realistic.
On the wave of success
Norwegian hydrogen specialist NEL ASA is currently showing how it can be done differently. First, the IPO of the former spin-off Everfuel became known, in which the Norwegian hydrogen specialist still holds 20% of the shares. In the meantime, several new orders have been received. The National Renewable Energy Laboratory (NREL) placed an order with the Scandinavians for a 1.25-megawatt electrolyzer. The NREL is a state-owned facility and is financed by the U.S. Department of Energy. The order is worth around USD 2 million. Days earlier, NEL Hydrogen Fueling, a subsidiary, announced a EUR 3.20 million order from Poland. Several hydrogen filling stations are to be built there. The share has strong momentum. The high volatility offers good entry opportunities in case of setbacks.
The market leader grows rapidly
The Canadian Company Almonty Industries operates two producing tungsten mines in Spain and Portugal. The big hit, however, should be the project in Sangdong in South Korea. The project is already well advanced and expected to go into production in 2022. The mine could then be responsible for 5% of global tungsten production and cover 30% of production outside China. 80% of the tungsten produced worldwide still comes from China. The goal of the western world is to achieve independence in the procurement of rare-earth metals, not only since the trade dispute with the USA has been boiling up. Almonty Industries is one of the primary beneficiaries of this trend.
Best tungsten project in the world
The analysts of First Berlin Equity Research rate the share as "BUY" with a target price of CAD 1.45. The mine operated in Sangdong possesses the enormous potential and is from the conditions, the "best tungsten project of the world." Sangdong has a life span of several decades, and the resource to investment ratio is very competitive at 3.9x. Also, the average tungsten content in Sangdong is 0.44%, twice the Chinese and global average. Currently, the paper is quoted at CAD 0.68, and according to analysts, it offers a good buying opportunity.