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March 20th, 2024 | 07:15 CET

Pure growth - Super Micro Computer, Royal Helium, Rheinmetall

  • Helium
  • armaments
  • chips
  • AI
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After weeks of chasing records, equities, precious metals, and cryptocurrencies are taking a breather, at least in the short term, ahead of today's decision by the US Federal Reserve. The current key interest rate decision and, above all, the Fed's quarterly projections on economic development, interest rates, and inflation will likely continue to shape events afterwards. The pause will likely be short-lived if positive signals regarding earlier than planned interest rate cuts are announced.

time to read: 4 minutes | Author: Stefan Feulner

Table of contents:

    Rheinmetall - EUR 500 mark in sight

    The defense industry has been booming since Russia's invasion of Ukraine and the turnaround that has been heralded should help companies to keep their order books full in the coming years. German flagship Rheinmetall took advantage of the opportunity to significantly expand its standing with NATO countries. Since February 2022, Rheinmetall shares have risen by almost 420% and once again reached a new all-time high of EUR 482.60.

    Following almost weekly reports of new artillery orders, this time the Düsseldorf-based company announced the expansion of its product portfolio to include light hybrid vehicles. At the beginning of this month, Rheinmetall Defence Nederland BV, a subsidiary of the Vehicle Systems Division, acquired full ownership of the Dutch start-up REEQ. This acquisition enables Rheinmetall to expand its range of light tactical vehicles and, at the same time, make the transition to hybrid technologies by integrating a fully electric powertrain into a military vehicle. The two companies have agreed not to disclose the financial details of the acquisition.

    Despite the Rheinmetall share price jump, various analyst firms remain almost euphoric. DZ Bank, for instance, has raised its price target from EUR 376 to EUR 524. The experts continue to expect several larger and long-term projects in the course of the year, as well as an increase in the order backlog to over EUR 50 billion.

    Royal Helium - Growth story on track

    While there has been a party atmosphere on the stock markets recently, many commodities have been in a broad correction for months. Recently, however, there have been clear signals from copper, lithium & Co. that the long-term bottom may have been reached. Experts agree that this will be followed by an upward trend lasting several years due to the high demand. The situation is similar for the noble gas helium, which is increasingly being used in semiconductor production, nuclear magnetic resonance imaging and space travel. This can be illustrated by the example of Royal Helium, one of the few listed pure plays on the market. The share has lost around 60% of its value to CAD 0.16 since May 2023, resulting in a market capitalization of CAD 45.66 million. Looking at the Company's current performance, the discrepancy in valuation can be seen at first glance.

    The industrial gas producer holds licenses and leases for 1 million hectares in Saskatchewan and Alberta, covering more than 15 potential helium fields. In Alberta, the Company also owns a plant that is expected to set a new milestone for helium plant emissions. Once approved, it is expected to generate between CAD 3 and 6 million per year in carbon credits.

    Royal Helium recently announced its plans for four key exploration projects. The Canadians are focusing on the completion and investigation of existing drill sites in the Val Marie, Ogema and Steveville areas. There are also plans to drill new wells in the 40 Mile project in Alberta. In particular, the Val Marie project, which covers 13,000 hectares, produced the highest helium level the Company has ever recorded in the first well. The Ogema property covers 27,000 hectares, and two wells have been drilled to date. The 40 Mile project covers approximately 3,100 hectares and hosts a well with historically high helium values. Based on the drilling results, the Company will then decide on a new processing site.

    The importance of this property to the economy is demonstrated by the Canadian government granting Royal Helium an interest-free loan of CAD 3 million under the Aerospace Regional Recovery Initiative to accelerate processing operations.

    Super Micro Computer - Seizing the moment

    Alongside Nvidia, Super Micro Computer has been one of the stock market stars for months, driven by the megatrend of artificial intelligence. From mid-January alone to its all-time high on March 8, the manufacturer of computers for data centers gained more than 300% to USD 1,229. The stock also made the leap into the S&P 500, where it was first listed on Monday of this week.

    The Company from San José, California, used the high share price to raise fresh money on the stock exchange and announced a public offering of 2 million ordinary shares. Based on Monday's closing price of USD 1,001, this would result in issue proceeds of around USD 2 billion.

    In the course of trading, however, the Super Micro share lost more than 12% to USD 880.00.

    Rheinmetall continues to march towards EUR 500 and is expanding its portfolio. In contrast, Super Micro Computer took advantage of the high share price to place a capital increase.

    The Company announced in a filing with the US Securities and Exchange Commission that the proceeds from the sale of shares would be used to purchase inventory, expand production capabilities, increase investments in research and development and for other operational capital needs.

    In addition, the number of outstanding shares of the Company would amount to 58.6 million after this transaction. The underwriter, Goldman Sachs, also has the option to purchase up to 300,000 additional shares for a period of 30 days. Royal Helium continues its growth story unhindered.

    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

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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