February 23rd, 2023 | 15:17 CET
Nordex, American Lithium, Globex Mining, Nel - New stock favourites?
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"[...] 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
Globex Mining: High cash position and exciting investments
Researchanalyst.com took another closer look at Globex Mining after the latest news and came to a positive conclusion: even after the 50% rally since November 2022, outperformance is expected in the coming months. Project quality is high and reported progress in the investment portfolio is positive. The commodity demand from a decarbonization perspective is leading to an international commodity shortage that cannot be resolved in the shorter term. This could only result in further price adjustments on the supply side. Globex Mining should be able to benefit disproportionately from this in the medium term, and the stock's re-rating is in full swing.
But what makes Globex Mining so interesting? It is a broadly diversified commodities company founded by commodities legend Jack Stoch and is also headed by him as CEO. He knows a thing or two about finding and industrially producing metals. Instead of concentrating on one or only a few projects, Globex has holdings in over 200 projects and is thus comparable to a diversified fund. The investment portfolio is highly attractive: gold, silver, copper, platinum and palladium, as well as base and speciality metals. Globex Mining sells or leases the projects to other companies and, in return, receives cash, shares and/or royalty payments on successful subsequent production.
Important for investors: extensive holdings ensure a steady news flow. For example, partner Brunswick Exploration Inc. has acquired additional mining claims for lithium anomalies in Quebec. Once the option agreement is completed, Globex will be granted a 3% royalty. Drilling results from the Harricana gold project in Quebec are also positive. Globex holds a 2% royalty there. Click here for the full analysis from researchanalyst.com.
American Lithium: Bad news from China
Media reports from China have unsettled the lithium sector over the weekend. According to these reports, industry leader CATL is starting a price war for batteries for electric cars. Car manufacturers - but not Tesla - are being offered discounts for long-term supply contracts. Customers would also have to commit to buying 80% of their battery needs from CATL. They would then have to pay a maximum of the equivalent of around EUR 27,000 per ton for lithium carbonates over the next three years. Currently, the price is more than twice as high. So will the lithium price halve? Investors are correspondingly unsettled.
The American Lithium share has been unfazed by the news in recent days and is consolidating at just over CAD 4. After the share had more than doubled within two months, this is healthy. And investors are waiting for the next price driver: this should be the IPO of the uranium subsidiary with a project in Peru. The value of the Macusani project is not fully reflected in the Company's value. The IPO should change this. In addition, American Lithium could use cash inflows to bring the lithium projects into production. It should also make it easier to sell the Company, as producers of batteries or e-cars are unlikely to be interested in a uranium project. Thus, more and more car manufacturers are securing lithium deposits. Most recently, General Motors took a stake in Lithium Americas and paid around USD 650 million for 25%. Tesla is also repeatedly traded as a buyer of lithium projects - most recently Sigma Lithium.
Nordex: Buy recommendation and new product
One buyer of raw materials are wind turbine manufacturers such as Nordex. After the Company struggled massively with supply chain problems last year, analysts are now expressing a positive view again. Most recently, the bank renewed its buy recommendation. However, the price target was slightly reduced from EUR 16 to EUR 14.80. The conversion of debt into equity is anything but a sign of strength, but at least the Company is now debt-free. The analysts believe that Nordex will achieve a better operating performance in the current year. However, this should not be reflected in earnings until the final quarter. Jefferies is somewhat more optimistic. The analysts believe that the Nordex share is worth EUR 16. The share is currently trading at EUR 14.
A new 6 MW turbine is to contribute to the improvement in operating performance in the future. Series production started this week in Rostock. And this was only seven months after the construction of the first two prototypes. The first 6 MW turbines of the Delta4000 series will go directly into two projects in the Netherlands, which together comprise 102 megawatts. Nordex already has orders for 1.1 GW for the delivery and installation of the N163/6.X turbines. Plant Manager Alexander Farnkopf: "Over the past few weeks, the entire workforce has been preparing intensively for the production ramp-up for this new turbine. These experienced employees have been producing nacelles for other Nordex turbines for years. Today, we employ around 770 people at the production plant. However, we would still like to hire and qualify around 75 skilled workers and welcome them as new colleagues to our current workforce of around 2,600 employees in Germany."
Nel: It is not a buy for JP Morgan
Nel investors should mark February 28 in their calendars. On this date, the Scandinavians will report on the fourth quarter and full year 2022. In the past, it often resulted in stronger price movements. In the run-up, JP Morgan is pushing the brakes on the share price. The analysts advise selling the share ("Underweight") and name a price target of NOK 11.06. Currently, the hydrogen specialist's share price is NOK 16.62. The potential in hydrogen refueling stations is recognizable. Nevertheless, it was not enough for a buy recommendation.
The energy transition will have many winners: Globex Mining could be among them. Diversification reduces the risks of individual projects, and the valuation is low. American Lithium has run a bit hot, but the concretization of IPO plans could reignite the price fireworks. With Nel, it is not wrong to wait for the next figures. It is still too early at Nordex to speak of a real turnaround.
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