26. April 2021 | 09:37 CET
NewPeak Metals, Barrick Gold, E.ON - These are the favorites until the end of 2021!
Stock indices at all-time highs, volatility falls, bitcoin falls, precious metal prices consolidate - with these few words, we can outline the mixed situation on the stock exchanges. However, the threat of inflation, rising interest rates and disappointments during the current reporting season due to very high expectations could lead to a jolting deterioration in sentiment on the stock markets. It is worth taking a look at the crisis currency gold and its little brother silver. A few days ago, the World Silver Institute published the study "World Silver Survey 2021" and reached an interesting conclusion. Based on the emerging demand and supply situation, a price level of USD 32 is forecast in the second half of the year.
time to read: 5 minutes by Carsten Mainitz
"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
NEWPEAK METALS LIMITED - Many arrows in the quiver
Those looking for a well-diversified commodity company with a high upside potential should take a closer look at the still little-known NewPeak Metals. The Australian micro-cap, which has recently started trading in Frankfurt, is a good investment opportunity given the potential described below. The Company owns three high-quality gold exploration assets in three of the best mining jurisdictions in the world: Argentina, New Zealand and Finland. During the current year, extensive drilling programs will be implemented on all properties and will provide a steady news flow. The Company's goal is to define a multi-million-ounce gold resource. To this end, the Company also has an excellent starting position in terms of personnel with CEO David Mason, Supervisory Board member Nick Mather, who held the position of CEO of SolGold until January 2021, and consultant Neil Stuart. He brings his experience from Cerro Negro and Orocobre.
The most significant asset in the portfolio is the Cachi gold project in Argentina. Late last week, NewPeak released drill results. These showed elevated silver grades associated with gold mineralization. A total of 8 diamond drill holes covering 1,136 meters were completed on the Vetas Cachi target. The best result showed mineralization of 0.81g/t gold and 67.1g/t silver over a length of 27.25 meters. The Company views the overall drill data as evidence that a potentially massive epithermal precious metal system may exist. Many more drill campaigns will be required to demonstrate this. Meanwhile, numerous existing large precious metal projects in the neighborhood in the well-developed Deseado Massif gold province can serve as an indication.
The Company has another arrow in its quiver with the Cap Burn gold project in New Zealand. A drilling program is currently underway here, the results of which the Company will report in June. The Finnish gold projects consist of the Tampere Gold Project acquired from Sotkamo Silver Oy and the Southern Gold licenses acquired from Sunstone Metals Limited. Drilling is scheduled to start in Finland in May. The Swedish Bergslagen tungsten project is also extremely interesting. Here, appraisals have been commissioned and are expected in the second half of the year. In addition, NewPeak holds a strategic stake of 30% in the oil and gas company Lakes Blue Energy. Currently, the Company is valued at only AUD 17 million or the equivalent of EUR 11 million. Given the numerous assets, these are absolute buy prices for NewPeak Metals' stock.
BARRICK GOLD - Well diversified commodity giant
Barrick owns many of the world's most productive gold properties and is also the world's second largest gold producer. Copper also plays an important role. Currently valued at CAD 49 billion, the commodities giant has a broadly diversified portfolio. Barrick operates in 13 countries worldwide, particularly in North and South America and Africa.
In the middle of the month, the Group announced preliminary figures for the first quarter. As expected, production volumes fell slightly. However, higher realized prices more than compensated for the decline in the bottom line. Final Q1 figures will be reported on May 5. For the current fiscal year, the Canadians have projected production volumes of 4.4 to 4.7 million ounces of gold and a copper output of 410 to 460 million pounds. We are curious about cash flows and the "war chest." As of the end of 2020, the Group had no net debt and had cash of USD 5.2 billion and a credit facility of USD 3 billion. That gives the Group plenty of options to grow in the future, including through acquisitions.
Investors can use the stock to profit from rising prices for precious metals and copper. Also, the Group's financial strength is a major plus point that justifies a valuation premium. The stock is currently trading at just under CAD 28. Analysts, on average, formulate a price target of CAD 36.80, an upside potential of a good 30%.
E.ON SE - Tailwind from the USA
Renewable energies play a central role in achieving climate targets. While solar energy is an integral part of the energy mix and should lead to a noticeable increase in silver demand in the medium term as silver is used in solar modules, green hydrogen is said to have a rosy future. It is essential for global target achievement that the major economies prioritize sustainability goals. A few days ago, an important step with signal character came from the USA. US President Joe Biden called for a two-day online summit to discuss the global climate and greenhouse gas reduction. Biden's departure from the climate policy of his predecessor Trump was to be expected, but the fact that China and Russia are now also taking part in this conference can be seen as a success. The People's Republic, the United States, India and Russia account for around 55% of global CO2 production.
The improved macro environment for energy stocks led to a more positive assessment of Citigroup for the sector and individual stocks last week. Citigroup upgraded E.ON shares on Friday from a previously neutral vote to "buy" and formulated a price target of EUR 12. Recently, Goldman Sachs had already given the same price target for the DAX stock. In the public discussion, most of the talk is about energy generation. However, infrastructure and the associated security of supply are also very important. E.ON has a special role to play here. Thanks to the successful integration of innogy, the DAX-listed Group is now the leading distribution system operator in Northern and Central Europe.
A few weeks ago, the Group published its outlook for the current financial year. The outlook was for an adjusted operating result (EBIT) of EUR 3.8 billion to EUR 4.0 billion and adjusted net income of EUR 1.7 billion to EUR 1.9 billion. In addition, debt is to be reduced significantly by the end of the year (4.8 to 5.2 times EBITDA). The share is moderately valued in several respects and promises upside potential. Based on analysts' average forecasts for the subsequent year 2022, the stock is currently trading at a 2022 P/E ratio of 12 and an expected dividend yield of 5.9%. If the above-mentioned US analysts are correct, the P/E ratio will drop significantly again and the dividend yield will increase. For long-term investors who want to increase the payout component in their portfolio with a stock with a predictable business model, this stock is just right.