22. September 2020 | 07:35 CET
NEL ASA, Newlox, Shell: golden profits with environmental protection
Future expectations for companies are valued into their prices on the stock exchange. Depending on the industry and business model, shares are either in high demand or 'out'. Conservative investors usually use valuation models to limit how much the value of a share can rise and under what premises. In practice, however, theoretical calculations can also be wrong, so they serve as a guide. The two classic cases are boom and crash. In one situation, the share price runs away from you and in the other case, the return comes under pressure.
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ISIN: CA65151R1001 , NO0010081235 , GB00B03MLX29
Profits with environmental protection
The Canadian company Newlox is so far known in Europe by only a few investors. The management is focused on the processing of historical tailings. In Latin America, Newlox has already commissioned its first plant and has been cleaning the tailings of previous mining operations ever since. The activity is particularly lucrative in regions where gold was previously mined by simple means. These tailings can be particularly productive with modern equipment.
Newlox aims to combine ecological and social benefits with economic efficiency. The extraction of gold from tailings is associated with significantly lower costs than exploration work related to inferred reserves of new mines. The company's goal is to reach a turnover of eight to 12 million USD per year, as quickly as possible so that the costs for the construction of the plant are amortized swiftly.
Newlox's strategy to clean up contaminated sites not only involves state support but also plans to grow organically from its resources. The business model is particularly attractive at a gold price of USD 1,900.00 per troy ounce and it is therefore only a matter of time before further investors become aware of the share and the increasing awareness is reflected in the charts.
Catastrophic start to the week or incredible opportunity?
The week started disappointingly for the Norwegian plant manufacturer NEL ASA and the price correction from the previous week continued. The resignation of Nikola's founder and CEO can be seen as a catalyst for this development. NEL ASA maintains a close business relationship with the US Company and investors now fear that the changes initiated at Nikola could also harm the supplier of the hydrogen ecosystem.
Short sellers have not been squeamish with EX-Nikola CEO Trevor Milton and have pulled out all the stops to bring about this result. Whether it is an admission of guilt or Milton just wanted to protect the company from further defamation is still unclear. In a few weeks, we will certainly know more about the balance sheets at Nikola and the possible consequences at NEL ASA.
Now the profit lies in purchasing
There is currently hardly a more exciting industry than the oil industry. Shell shares are now trading not far from the level at which fears of the Corona pandemic peaked. While on the one hand the pharmaceutical industry, equipped with special permits and taxpayers' money, is working flat out on a vaccine against Covid-19, expectations for the energy sector have dropped significantly. This illogical dislocation offers now and today an entry opportunity into a developed and neglected industry.
John Jeffrey is the CEO of Saturn Oil & Gas from Canada who summed it up in a statement when he announced that in this market environment it is more worthwhile for him to acquire than to drill for oil himself. So it will only be a matter of time before oil producers are back in the focus of investors. Oil will still be needed for many decades to come, but many oil companies will not survive the current crisis because of the debt burden. Against this background, shares of Saturn Oil & Gas or Shell are particularly exciting in this market environment.