30. July 2021 | 12:36 CET
Newmont, White Metal Resources, Volkswagen: This is where the future is traded
New, "green" trends are turning the raw materials market upside down. The boom in electric mobility means that we need more copper. Other industrial metals are also in demand. Precious metals, such as silver, are moving into focus because of the growing demand for solar and photovoltaic systems. At the same time, central banks around the globe remain relaxed despite rising inflation - this could be water on the mills of gold. We present three stocks and evaluate their opportunities.
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ISIN: NEWMONT CORP. DL 1_60 | US6516391066 , WHITE METAL RES | CA9640461062 , VOLKSWAGEN AG VZO O.N. | DE0007664039
"[...] 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
Newmont: Wait and see
Newmont is a true classic for gold investors - after all, it is the world's largest gold producer. But the Company has more to offer. Newmont generates about 25% of its revenue from copper, giving the Company a major advantage over competitors such as Barrick. Copper benefits from the general industrial demand and has ensured that the share price has developed well in recent months. The figures are also otherwise good. Newmont shines with rising sales, lower costs and a higher dividend. Although there is currently only about 2%, this is a nice extra income, especially for conservative investors.
As the Company continues to refine its strategy and has sold a major project, among other things, investors can look to the future with confidence. Fundamentally, Newmont is in the right place and the commodity mix fits the times. While other gold producers are still thinking about increasing their share of copper, this has long been standard practice at Newmont. The share has picked up speed recently but still faces some resistance. Only above EUR 54 will the overall picture become sustainably friendly.
White Metal Resources: High leverage, good projects
The share of White Metal Resources is of a completely different caliber than Newmont. The Company has several raw material projects in Canada, Namibia and Newfoundland. In addition, it is a joint venture partner in other projects. All properties are in an early stage. Geological surveys are being conducted, drill targets identified and progressively confirmed. This phase of exploration work is characterized by low capital investment and high leverage: If raw material discoveries indicate that a project can be further developed, this generally causes a jump in valuation. This can also be seen in the market capitalization. White Metal Resources is currently valued at only around EUR 6.5 million with five projects and three further joint ventures.
The Company recently provided news of two projects: A rock sample from the Okohongo project in Namibia revealed grades of 35.2% copper and 548 g/t silver. At the Tower Stock project in Ontario, Canada, three additional holes were drilled for a total length of 597 meters. The operations are part of a 3,000 meter program. The Company is confident and eagerly awaits the results of the drilling program. Given the calm in the market, investors may consider adding a speculative stock like White Metal Resources to their portfolio.
Volkswagen: Lots of progress, just not on the share price
Moderate additions are not enough with shares like Volkswagen if you want to give your portfolio significant impetus - the Company is too big, the market too transparent. When Volkswagen announced its electric strategy in recent months, the market had already anticipated some of the fantasy this would generate. At present, the share price is still hovering at a high level. Volkswagen recently made headlines with its takeover of the car rental company Europcar. The purchase is seen as a step toward becoming a mobility provider. Europcar has many branches, including in smaller cities, and Volkswagen is targeting this network. The Company remains on course. Many models are already electrified, and all other measures point the way toward the future. With its size and market power, VW has every opportunity to remain the market leader in the future.
While much of the fantasy is already priced in at Volkswagen and large companies in the commodities sector, such as Newmont, sometimes lag commodity prices a bit, stocks like White Metal Resources offer the opportunity for dynamic developments even apart from the situation on the overall market. The reason: Every drill hole can make the difference. Conversely, that also means risk, but that can be managed through position size. Perhaps the prospects for returns with commodities have rarely been better than today.