February 28th, 2023 | 15:23 CET
Nuclear power, yes please! GoviEx Uranium, Rheinmetall, BYD, NIO - Important power for e-mobility!
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Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
GoviEx Uranium - Except in Germany, a worldwide boom in nuclear power
As recently as 2007, a pound of uranium at times cost more than USD 140 per pound before a long descent in prices began. With the outbreak of the Fukushima disaster in 2011, sentiment against nuclear power peaked, forcing the price of uranium below USD 50. The nuclear fuel bear market lasted more than 10 years before prices are now slowly turning upward again.
The reason is the global undersupply of the yellow raw material. Large uranium reserves are slowly running out, and after years of low prices, no one has really invested in new mines. This is now taking its toll, as the sector has been running a structural deficit since around 2018. Due to the current increase in the price of energy raw materials, uranium is likely to face a longer upward cycle. With the climate crisis in mind, many countries are moving to expand their nuclear power capacity, as nuclear energy is considered carbon dioxide neutral.
Overnight, the available amount of uranium, which today comes mainly from Kazakhstan and Russia, cannot be expanded at will. Even under current geopolitical conditions, new mining sites must underpin a stable world supply. The Canadian company GoviEx Uranium is planning such a project. It aims to get to market quickly by exploring and developing its flagship Madaouela project in Niger. At the same time, GoviEx owns the approved projects called Mutanga in Zambia and a multi-metal deposit in Mali. It will be some time for the industry as permitting conditions have become more complex and secondary supply has been exhausted.
GoviEx already has all permits, operates in mining-friendly countries and has a larger pipeline. In the last 12 months, the Company has made great strides and has already published a feasibility study for Madaouela. The result is a resource of 120 million pounds of uranium oxide in measured, indicated and inferred minerals, representing one of the largest deposits in the world. Following the submission of the feasibility study, GoviEx has entered into promising discussions for project-related debt financing.
"We have developed a clear strategy focused on funding the Madaouela project, further discussions with off-takers and becoming a producer, while continuing to develop Muntanga and capitalize on potential exploration opportunities at Falea," according to a shareholder letter. The stock trades at CAD 0.21, or EUR 0.15, and offers good leverage to the uranium price.
CEO Daniel Major outlined his strategy in the uranium market at the 6th International Investment Forum:
Rheinmetall - With a brilliant rally into the DAX 40?
The German government announced a EUR 100 billion package for the German armed forces a year ago. The shares of defense companies jumped by over 50%. But little has happened so far. According to Rheinmetall, only a small part of the money has been called up, and there have been no major orders for new tanks or artillery until the beginning of 2023.
However, due to the increasing escalation in Ukraine and rising Western pledges, the government in Berlin could now be under pressure to act. After all, NATO's defence readiness is tied to a minimum investment of 2% of member budgets. Leading nations such as Germany are being asked to do much more, according to the motto: "If you have a lot to lose, you should contribute accordingly!" Meanwhile, Rheinmetall's bull market continues, reaching a new all-time high of EUR 259.20 in mid-February. With a market capitalization of EUR 10.6 billion, the MDAX stock is now clearly on course for DAX inclusion, which should take place as early as March or June at the latest. Corresponding ETFs and index funds would then presumably have to increase their exposure.
Fundamentally, the popular high-tech and defense stock is not too expensive, with a price-to-sales ratio of 1.2 and a 2024 P/E ratio of 13.3. A dividend yield of 2.9% is on the cards. There is no reason to rush into the stock, as recent DAX newcomers have often fallen first after a short time. In the medium term, however, the value has great charm for a portfolio addition.
BYD and NIO - Can Tesla convince at Investors Day?
Tesla's competitors, BYD and NIO, reported strong sales figures at the end of the year. The US competitor Tesla, on the other hand, did not achieve a significant increase in sales despite lowering prices. Currently, many dealers in China are offering heavy discounts, but BYD headquarters denies a change in pricing policy. BYD does not need discounts because it is the market leader in China, and starting this year, it will also offer high-priced vehicles under the Yangwang brand, which should have a positive impact on earnings.
The Tesla share is currently the subject of discussion, primarily due to the upcoming Investors Day on March 1. The reason: Elon Musk has announced that he will unveil the third part of his Tesla master plan. But what will the hotly anticipated event on Wednesday be about? From the pre-announcement, the bulls deduce that Elon Musk sees the achievement of his previous goals as a foregone conclusion. Bears see it more as a red herring or an admission that the second master plan could not be successfully implemented. Investor wrangling recently resulted in daily 5% jumps in one direction or the other. Investors should note that Tesla has smoothly doubled in value in 6 weeks. The valuation premium of an even USD 300 billion equals the current capitalization of all European automakers combined.
Elon Musk has already revealed what the third edition of the Tesla master plan will roughly be about: Namely, the path toward a future with sustainable energy. Artificial intelligence also plays a role in the billionaire's plans. According to surveys, many Tesla fans want a small car in a price range of around USD 25,000. Elon Musk will think carefully about what he has to say on the subject of autonomous driving because there are many critics here. When it comes to future battery technologies using new raw materials, things get exciting. The lithium and nickel sector is glued to Elon Musk's lips. In the run-up, Elon Musk's stock continues to rise, while BYD and NIO correct. Stay alert! Anything is possible!
Climate protection through CO2 avoidance depends on many components. E-mobility will not be able to show itself particularly positively here due to questionable input sizes because the production of these vehicles already devours vast amounts of additional resources. For lack of better ideas, the topic is nevertheless politically driven, which requires vast amounts of electricity, which from today's perspective can only be generated with nuclear power. BYD and Rheinmetall are important standard stocks in the portfolio. The Canadian GoviEx Uranium is an exciting player in the market for nuclear raw materials.
Conflict of interest
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