February 3rd, 2021 | 08:10 CET
Nokia, Blackrock Gold, Delivery Hero: Where profits are sustainable
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At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Nokia: What is left of the Reddit hype?
A few weeks ago, the Nokia share was a rather dull stock - until Reddit gamblers drove the value up. The high-flyer stock of the 1990s has a turbulent history and even faced bankruptcy at one point years ago. But Nokia has reinvented itself and now operates as a network supplier. Today, mobile data networks are just as important as highways or power lines. Although the Finns' products are more expensive than the Chinese competition, there are reservations about Huawei. If Chinese companies were to equip our data networks, some observers say it would be a security risk.
Investment strategists, such as Kim Catechis of the US investment boutique Martin Currie, pointed out years ago that these security concerns could lead to a situation where standard market mechanisms around 5G infrastructure are undermined and Nokia, as a European equipment supplier, can compete despite higher costs. Meanwhile, many regions have turned down 5G hardware from China.
For Nokia, these are favorable conditions. Moreover, since the stock had been targeted by Reddit traders and went on a roller coaster ride at the end of January, it no longer seems uninteresting. Investors need to be careful when they get in, though. As a network equipment supplier, Nokia tends to be a conservative stock that can play to its strengths over the long term. However, since the 5G pie has already been widely distributed, investors should not expect any big surprises.
Blackrock Gold: With fresh capital and silver fantasy
Blackrock Gold's stock, on the other hand, is always good for surprises. The Company operates two projects in Nevada around gold and silver. Blackrock's priority is the Tonopah West project. The Company has already drilled 24,000 meters here in 2020 and extended the target zone "Victor" by 500 meters at the end of December due to positive results. Further results from the drilling program are pending in the coming weeks.
Blackrock Gold already believes that Tonopah-West offers further exploration potential, which will be explored in additional measures in 2021. The Company most recently announced a CAD 9 million financing at CAD 0.72 per share to fund these drilling projects. Following the financing, Blackrock's share price rallied significantly but is still nearly 50% below last summer's level.
In general, Blackrock's share price has formed a solid base over the past months and has repeatedly shown signs of dynamic breakouts. The fact that there is fantasy in the value is also proven by the considerations to spin off the Silver Cloud silver project. Blackrock started a drill program here at over 3,500 meters to show similarities to Hecla Mining's nearby Hollister mine. Given the strong performance of the flagship Tonopah-West project and Silver Cloud's silver fantasy, the stock appears to be worth a look at current levels.
Delivery Hero: Is the restaurant industry threatening a comeback?
Similar to Blackrock Gold, Delivery Hero's stock also twitched suspiciously higher at one point in recent days. The fantasy behind Delivery Hero is simple: More and more people are working at home, which creates an additional market for meal delivery. The stock has consolidated over the past few weeks. On a one-year horizon, the stock has a yield of around 80% - so the long-term upward trend is intact.
Although Delivery Hero will continue to defend market share in the future, it is to be expected that people will again increasingly seek out restaurants as the end of the pandemic approaches. Looking ahead to the next few quarters, this development could put a damper or two on things. However, the business model appears promising in the long term, although Delivery Hero is not immune to competition. After the rise of the past year, investors should be cautious with Delivery Hero. Although share price gains are possible again, the quarterly figures must keep pace with the valuation.
The situation is similar for Nokia. Short-term gains resulting from short squeezes are unlikely to be sustainable, although the stock has more substance than Delivery Hero. In contrast, Blackrock Gold's situation is entirely open: If gold and silver have to stay in the ground due to weak framework data, there is nothing for shareholders to gain. However, if the past months' positive expectations for the projects of Blackrock Gold are confirmed, high profits could await investors.
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