October 6th, 2022 | 11:43 CEST
Nordex, Cardiol Therapeutics, Rock Tech Lithium - Great opportunities in bombed-out stocks
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"[...] In 2020, the die is finally cast in the automotive industry towards electromobility. [...]" Dirk Harbecke, Executive Chairman, Rock Tech Lithium Inc.
Cardiol Therapeutics - Financed blockbuster candidate
In the Corona era, biotechnology stocks in the form of vaccine producers were still the high flyers on the world's stock markets. Shares such as BioNTech, CureVac and Moderna multiplied within a few months and reached insane valuations. The exaggeration has now partially dissipated. On the one hand, the euphoria about possible billions in profits for the next few years has faded. On the other hand, the stricter monetary policy of the central banks has hit the capital-intensive biotech sector with all its might. Fears that financing for further research into the respective compound might fail to materialize in the future were followed by a crash of the NASDAQ Biotechnology Index by more than 40% at its peak. In addition, shares in the sector were sold off across the board, even though the "out of cash" issue is by no means present in many stocks.
In the case of Cardiol Therapeutics, this phenomenon is particularly evident. The Company, listed on the TSX, Nasdaq and in Frankfurt, currently has a market value of CAD 79.98 million. In contrast, management says it has more than CAD 50 million in cash in the bank. That means the research work is financed until the year 2025, and a further capital injection will not be required in the next 2.5 to 3 years.
Another plus point of the board, which is staffed with first-class managers, is the clinical picture around which the research work revolves. After all, the market for combating cardiovascular disease is enormous and is considered the most common cause of illness and death in the Western world. Cardiol Therapeutics uses highly purified cannabidiol as a solution and has blockbuster potential with its lead product CardiolRx. It is currently in clinical development for use in cardiovascular medicine. CardiolRx is currently being evaluated in a multinational, randomized, double-blind, placebo-controlled Phase II/III study, with study results expected in the fourth quarter, which, if positive, should significantly impact the share price.
Recently, the annual scientific meeting of the Heart Failure Society of America was held, where Cardiol was able to present preclinical study results. The results provided evidence that the active pharmaceutical ingredient API contained in CardiolRx inhibits and also promotes the reversal of those mechanisms known to play a role in the initiation and development of cardiac fibrosis. The data was presented by research partners at Houston Methodist DeBakey Heart & Vascular Center at the event.
From a chart perspective, Cardiol shares face an important decision. In the area of CAD 1.28, the low for the year has already been tested for the third time. If the price level is successfully defended, this could develop into the foundation for a strong countermovement. The MACD already shows positive divergences; moreover, the relative strength indicator is in the oversold area. The analysts of Canaccord Genuity Capital Markets are optimistic about the paper of the Canadians. In this regard, the analysts were enthusiastic about the main product, CardiolRX, due to the diversity of indications and predicted that the product has the potential to become a successful anti-inflammatory and anti-fibrotic therapy. The verdict for the Nasdaq stock is "buy", with a price target of USD 7.00. Thus, the experts predict a six-fold increase from the current price.
Rock Tech Lithium - Capital increase digested
Demand for lithium is expected to increase by about 130% between 2020 and 2025. Electric vehicles accounted for about 39% of demand in 2020. That is expected to increase to well over 60% by 2025. Consumer electronics batteries, energy storage batteries and a variety of industrial processes account for the remaining 40%, according to the US Geological Survey. Finally, by 2030, the global demand for lithium carbonate is expected to reach 1.79 million metric tons. Reading these forecasts, one might think that the profiteers of this trend are already at excessive heights. But far from it.
The German-Canadian GreenTech company Rock Tech Lithium is likely to become one of these beneficiaries of the shortage of the critical raw material lithium in the long run. However, instead of flagpole-like prices, the Company has seen a steep decline in recent weeks, even though it was able to sign a long-term cooperation agreement with automotive giant Mercedes Benz. The announced capital increase, which will bring Rock Tech Lithium around CAD 50 million for further expansion, had a strong impact on the share price. As a result, the share price plunged more than 50%, from over CAD 5.00 to CAD 2.27. At the current level of CAD 2.91, the share is working on bottoming out. A further buy signal would result from exceeding the mark of CAD 3.49. The analysts of Montega see the Rock Tech share as a buy candidate with a price target of CAD 10.00 on a 12-month horizon.
Nordex - Is the wind turning?
Exploding raw material and energy prices and thus rising production costs are gnawing away at the margins of wind turbine manufacturers. By contrast, the order books are full to bursting, and the accelerated energy turnaround is unlikely to change this in the near future. Nordex's most recent order again comes from Finland. The largest wind power operator in the Nordic country, Finnish investor Exilion Tuuli Ky, placed an order with the Nordex Group at the end of September for the delivery and installation of 17 N163/5.X turbines for the "Isokangas" and "Palokangas" wind farms. Both contracts comprise around 100 MW and include premium service of the turbines over a term of 30 years.
The "Isokangas" and "Palokangas" wind farms are being built in the municipality of Ii in northern Finland. The delivery and start of installation of the wind turbines is scheduled for spring 2024. The turbines will be used as cold-climate variants.
In the meantime, the analyst firm Jefferies has left its price target for the Hamburg-based company at EUR 13 in its latest study. The investment rating remains "buy".
Due to the market correction in recent months, shares lost significant value despite a strong company performance. The analysts see a 500% opportunity for the biotech company Cardiol. Rock Tech Lithium and Nordex are also listed significantly below the price targets of the experts.
Conflict of interest
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