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July 25th, 2022 | 13:58 CEST

Quality is the trump card: Alphabet, MAS Gold, Amazon - Shares that always bring joy!

  • Gold
  • Technology
Photo credits: pixabay.com

The capital market environment remains tense. Squeezed by historically rising inflation figures, which do not even reflect the reality at the supermarket checkout, and massively increased interest rates, the asset class equities are trying to manoeuvre through the summer. In the face of substantial price discounts on the bond market and stagnation in the real estate sector, investors are asking themselves: Where to put their money? The fact remains that the Russian conflict and the rise in the price of fossil fuels are putting the global economy under cost pressure, with a new surprise lurking almost every day as to which goods are simply out of stock or can no longer be supplied in the long term. In this mixed situation, selection is the trump card. We have a few ideas.

time to read: 4 minutes | Author: André Will-Laudien
ISIN: ALPHABET INC.CL C DL-_001 | US02079K1079 , MAS Gold Corp. | CA57457A1057 , AMAZON.COM INC. DL-_01 | US0231351067

Table of contents:


    Bill Guy, Chairman, Theta Gold Mines Limited
    "[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited

    Full interview

     

    Precious metals - Why does gold fall despite high inflation?

    The ECB has reacted and raised the key interest rate as expected by 50 basis points. The markets took it with composure because the expansion of inflation and the boiling EURO exchange rate demanded an official reaction. The previously scolded gold then also turned upward at a low USD 1,682 and achieved at least a 3% rebound to USD 1,727 by the weekend. Silver could not quite follow suit, recovering only 1% to USD 18.56.

    So why don't precious metals come off as inflation winners? There are certainly many reasons for this: On the one hand, the market technique has been against an upward trend for months, and then the multiple margin calls are added as selling pressure. Many equity investors hedge their portfolios with precious metal components. If stocks fall sharply in crises, they hope to compensate by making gains in the gold sector. Unfortunately, this calculation did not work out in 2022 either. The hare runs differently! Slowly, it must be suspected that the "bubble" of the last central bank decades now has a leakage point, and the hole through which the air is slowly escaping is simply getting bigger and bigger. The result is a salami crash through all asset classes. Nevertheless, where can stability be found?

    MAS Gold - With a good strategy into the next league

    Canadian company MAS Gold Corp. is an explorer focused on potential gold projects in the prospective La Ronge gold belt in Saskatchewan. The state of Saskatchewan was recently ranked No. 1 among 111 jurisdictions in 83 countries for its mineral exploration and mining regulatory framework. "Public authorities have been working for years to optimize location factors for mine exploration, which is a key factor in our country's continued economic development," says Premier Scott Moe.

    MAS Gold's goal is to further develop the currently acquired historic 1 million ounces of gold from its portfolio and recently updated resources on the Preview-North and Greywacke Lake properties in the geologically interesting La Ronge Gold Belt toward 1.5 million ounces. This is being done through planned strategic acquisitions as well as step-out and verification drilling. In the longer term, the property could thus continue to grow steadily and become the focus of larger producers, but the longer-term vision of producing its own gold remains a key development objective. The overall infrastructure is also outstanding, enabling the establishment of a successful mining site.

    Core investors currently on board are Eros Resources and Comstock Metals with a combined 24%, with a further 22% held by insiders and institutional investors. Roadshows will begin in the fall, where the emerging gold explorer will introduce itself to an international audience. The share continues to keep a quiet summer sleep in the zone of CAD 0.05 to 0.07 and is thus valued at only EUR 9 million despite all the outstanding prospects. Compared to its peer group, it is thus already valued at a 25% discount. However, this could change soon because the signs for gold as inflation protection are stormy.

    Alphabet and Amazon - Will splits help against the downward trend?

    A proven means of attracting more attention, especially from the retail sector, is to split heavy stocks into nominally smaller pieces. In doing so, the original number of shares is expanded by an arbitrary factor to transform the price per share into smaller sizes. That is what happened with NASDAQ blockbusters Alphabet and Amazon. In the last six weeks, both stocks had added 19 additional shares to a security held by their investors. Now, both shares are no longer quoted at a good EUR 2,000 but around EUR 100.

    Long-term studies show that such a split benefits the share price development. However, an important prerequisite is that the markets also allow an upward trend of the split shares. At the moment, however, investors are still more willing to sell because of the interest rate shock. Alphabet recovered almost 20% when announcing the upcoming bonus shares but has recently lost more than 10%. Amazon fared somewhat better. Here the share already lost heavily in the run-up to the sell-off on the NASDAQ, and the split announcement was then able to stabilize the price at least by just under 20%. The bottom line is that both stocks are still lagging in a 12-month comparison by 7% and 22%, respectively.

    The recalculated fundamental ratios for 2022 to 2024 still show P/E ratios of between 50 and 30 for Amazon, while the ex-Google share Alphabet already has a low P/E ratio of 12 to 17. Since both stocks are growing unabatedly, they should again be at the forefront of the next upswing in technology stocks. At the moment, however, the decisive factor is the price at which the popular stocks can be booked back into the portfolio. Just stay on the side of the road a bit longer, the capital markets are just about to adequately price in the upcoming recession.


    Sharp interest rate rises and inflation are causing problems for stock prices. However, with volatilities of 27%, the big sell-off does not seem to be over quite yet. The pivotal point remains the duration of the Russian conflict. Equities will likely continue to suffer if no positive change exists in 2022. Blockbuster stocks like Alphabet and Amazon are always in demand. Through strategic progress, MAS Gold could also quickly get on the buy lists of dynamic gold investors.


    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

    André Will-Laudien

    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.

    About the author



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