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February 17th, 2022 | 12:10 CET

Peloton, Diamcor, Bayer - Trust, tangibles and expertise

  • Diamonds
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Peloton gets in shape with streamlining just like its existing customers. 90% of early adopters remain loyal to the Company. Rough diamonds achieve new record prices, Diamcor profits, and so do its investors. Bayer comes up trumps in the agricultural business with innovative solutions for corn cultivation. In the upcoming market phase, investors want to be prepared. Investing in price-setters that take advantage of strong inflation makes sense. We take a look at three investment opportunities.

time to read: 5 minutes | Author: Juliane Zielonka
ISIN: PELOTON INTE.A DL-_000025 | US70614W1009 , Diamcor Mining Inc. | CA2525312070 , BAYER AG NA O.N. | DE000BAY0017

Table of contents:

    Peloton - Existing customers stay on the ball

    It has been a rather tedious pedal for US digital fitness company Peloton (PTON) these days. After a shakeup in the executive suite and the pandemic slowly subsiding, the growth stock's real challenges are becoming apparent.

    New CEO Barry McCarthy wants to cut Peloton's costs in a swashbuckling move. McCarthy has deep experience with platform economies because of his past. He was previously chief financial officer at Netflix and Spotify. His new goal: to cut expenses at his new employer by USD 800 million.

    2,800 employees have already had to leave the Company. Their small consolation: a one-year Peloton membership allows them to stay on, at least virtually, while they go job hunting in times of Corona. Overall, the global customer base seems to be the unfair advantage over the competition. With a 90% customer retention rate, the innovative Company has an intangible asset on its hands that it can wisely build on. The mix of digital training partners and fitness challenges to their favorite music on their home peloton bike is a feel-good factor for customers.

    Peloton has 2.6 million licensed songs in its repertoire, including artists like Beyoncé, Taylor Swift, ABBA, Queen, Foo Fighters and the Beatles. So while customers are happily working out with their favorite artists, CEO McCarthy is sweating it out on an entirely different front.

    With rapid growth in the niche of hardware and software for home athletes, logistics and supply chains are in worse shape than they should be. The Company spends too much on individual components. The high number of suppliers also leads to delays in the supply chain. That annoys new customers in particular.

    Takeover rumors by Amazon, Apple and especially Nike caused the share price to soar again. But the founder and his new management team are also pulling the strings on their own to melt down the Company's excess weight and keep it on a lean course to further growth. Peloton may be a diamond in the rough that still needs to be polished.

    Diamcor - Extreme price increase compared to the previous year

    Due to the high volatility on the stock market in recent months, investors are increasingly looking at alternatives. Investments in tangible assets have increased sharply in recent years. These include art, diamonds, classic cars, watches and jewelry. The best of both worlds - stock market and tangible asset alternatives - is combined by Diamcor Mining. The Company is a proven, established supplier of rough diamonds to the world market.

    Diamcor is well-positioned to meet increased demand. "Rough diamond prices appear to have increased due to strong demand and low inventory levels. We continue to work diligently in the coming months to complete our second phase of modernization, with the goal of further increasing our processing volume in this positive diamond market," Diamcor CEO Dean Taylor said last week.

    Depending on their size, texture and quality, diamonds are used in industries such as medical devices, drills and cutting tools. In the luxury segment, the high-carat stones find their way as exclusive jewelry. From the mine to Tiffany & Co on New York's 5th Avenue, the path of the diamonds is clearly structured. After pre-sorting into appropriate packages, the diamonds are delivered to approved diamond bourses. There, supply and demand are regulated via tender procedures. The tenders take place every four to six weeks. Diamond buyers visit these trading centers on behalf of their customers in order to acquire the rough at the highest bid.

    In the first tender of 2022, Diamcor Mining sold 3,063 carats of Krone-Endora rough from Venetia, its deposit in South Africa, at an average price of USD 330 per carat. That represents total proceeds of USD 1 million. Carat is a unit of measurement for the weight of diamonds. One carat is equal to 0.2 grams of weight of the gemstone. That compares to USD 606,415 from the sale of 2,028 carats at an average price of USD 299 per carat in January 2021.

    "The strong prices achieved were the result of increases seen across all categories and assortments offered," CEO Taylor said. Diamcor plans to hold another sale in the fourth quarter ending March 31. "Diamonds, after all, aren't just "a girl's best friend."

    Bayer - Growth in corn business through Phase IV project

    Bayer AG is recording breakthroughs in research and development in its agricultural business (Crop Science). In the areas of crop protection, seeds and digital solutions, the Company aims to lead farmers worldwide to optimized growth.

    Still unresolved is the glyphosate scandal, which cost Bayer a lot of money and reputation. In 2018, the pharmaceutical and agrochemical group Bayer paid USD 63 million for the US company Monsanto and bought the now more than 120,000 lawsuits filed by farmers, gardeners, and other consumers against the herbicide 'Roundup' brought to market by Monsanto. US courts ruled that the glyphosate contained in the product "significantly" contributed to plaintiffs' cancers. The simmering dispute could be decided by the US Supreme Court this year. If the US Supreme Court judges refuse to accept Bayer AG's appeal, the Leverkusen-based Company could face up to EUR 15 million in damages.

    But with the health hazards, the Company has also bought innovations. Bayer's research and development department is bustling. Low-growing corn is set to change cultivation. A commercial pilot project is planned for 2023 in North America. More than 500 new seed varieties and hybrids and over 300 new registrations in crop protection strengthen the Company's portfolio. Bayer expects a sales potential of up to EUR 30 million with its research and development pipeline. According to the Group, the advantages of low-growing corn lie in the length of the stalks. The novel corn crop is around one-third shorter. And because it is closer to the ground, it is more protected from wind and weather-related environmental influences. This increases the likelihood of a high-yield harvest for farmers.

    In addition, low-growing corn offers more precise use of crop protection products. It is not yet known which specific products will be used. For Bayer, these are advantages with sales potential.

    Peloton is using the opportunity to streamline its logistics and supplier operations. Existing customers also benefit from the weight loss and remain loyal to the growth company. For risk-averse investors, a value with growth opportunities. Diamcor Mining combines the best of both worlds for stock market investors who want to invest in solid, tangible assets. The market for rough diamonds is picking up in price and, with it, the buying opportunity for the Company's stock. Bayer AG has the unresolved Monsanto case breathing down its neck and is looking ahead in the agricultural business through its advancing Phase IV developments for corn cultivation, including a 2023 pilot project in North America. The opportunities and risks of the share should be weighed carefully here.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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