14. June 2021 | 08:48 CET
NEL, dynaCERT, Volkswagen: Investment ideas from conservative to speculative
The automotive industry is on the move again! Premium manufacturers, in particular, are enjoying good business. Although the trend is towards electric cars, there are alternatives, especially for trucks and other machinery: In recent months, hydrogen titles have been elevated to a pedestal in the media. But despite its good prospects, the technology is not yet ready. We explain what forms of mobility are available and how investors can invest.
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ISIN: NO0010081235 , CA26780A1084 , DE0007664039
"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
NEL: Do not hope, but act
NEL's stock has been one of investors' favorites for months. The Company produces hydrogen and takes care of its transport and storage. On the stock market, the story of the Norwegian Company, which also holds some investments in the hydrogen sector, was well-received for a long time. As recently as the beginning of January, one share was trading well above EUR 3. And today? The value seems bombed out and is heading for the annual low of October 2020. So all the hype on the stock market is already over. But what will happen to NEL now?
The Company is well-positioned, but it is now clear that there is a lot of competition in the hydrogen sector. Large corporations are also increasingly getting involved. In recent weeks, this has meant that NEL has not received some orders that were already considered secure. Since the Company is still valued at around EUR 2.4 billion, but sales are conceivably low, and real profits are a long way off, NEL shareholders have to ask themselves why they are still invested today. Hydrogen technology is particularly suitable for ships, heavy machinery and trucks, but it will probably be a long time before hydrogen trucks roll along our highways in large numbers. Until then, the industry faces a wave of consolidation. Private investors should not hope for better times - experience has shown that this usually only makes things more expensive.
dynaCERT: Is now the hour of transition technology?
While NEL has been the darling of the stock market for several months, dynaCERT has been waiting in the wings for what feels like forever. The Company has developed technology that can be used to convert existing internal combustion engine vehicles. The result: up to 19% less CO2 emissions and fuel consumption. dynaCERT even offers software that can be used to show the savings. Here is where it becomes particularly interesting for companies: Saved CO2 can be converted into corresponding certificates, which companies can either use or sell. Showing how much climate gas has been saved is also good for the Company's green image.
The patented HydraGEN™ technology uses hydrogen to make diesel engines more efficient and can be easily retrofitted. In the past, some municipalities have already used the technology, for example, in local public transport. As a result, this means that existing vehicles can continue to be used - which is also a form of sustainability. Particularly in connection with the often unsustainable mining of critical metals for electromobility, dynaCERT occupies an interesting niche. Particularly in large vehicles, where hydrogen technology, which is not yet fully developed, is an option, dynaCERT's solution can ensure a sustainable technology turnaround. The share is trading near its multi-year low and has repeatedly been capable of price jumps in the past.
Volkswagen remains on course
By contrast, the sky is full of violins for Volkswagen shareholders. The Company appears to be taking an aggressive approach to the mobility revolution: In addition to electrifying its vehicle fleet, Volkswagen also wants to get in on the action regarding batteries and the raw materials they require. This is going down very well on the stock market: The share price rose by 60% last year alone. The market likes the new direction. In addition, Volkswagen has solid brands and well-established business relationships. Following the change in strategy, the Company is expected to continue to play a vital role in the future. Volkswagen has a good reputation in China in particular. The country is the most important sales market for automobiles.
For investors, Volkswagen remains a solid stock after the bold move. Unfortunately, the trees are not likely to grow to the sky for the Wolfsburg-based Company. However, the stock can still play a good role in the portfolio - also because of the dividend. Investors should, however, be very cautious about NEL. The competition is fierce and the stock market has run out of steam.
On the other hand, dynaCERT has almost a unique selling proposition. If the Company succeeds in entering the market and is able to report large orders, the share is likely to be revalued. Until then, however, the stock must be considered highly speculative. The transition technology paired with software for analyzing fuel savings and collecting other data is an exciting field. Investors have numerous options around solution providers for mobility and can invest both conservatively as well as speculatively.