Rheinmetall, Almonty Industries, Applied Materials - From high to high

Rheinmetall AG - Momentum without end

Before the invasion of Russia, investments in armaments companies were still classified as "socially harmful" because their products caused death and suffering, but after the turnaround, they have become all the rage on the stock markets. Last week, the Renk Group made a spectacular stock market debut, and Düsseldorf-based Rheinmetall AG is still unstoppable after reaching a new all-time high of EUR 388.20. The chart currently resembles a flagpole, and the RSI and MACD are already in overbought territory. Investors who are already invested should, therefore, gradually tighten their stops; despite all the euphoria, a new investment is unlikely to be advisable due to the now ambitious valuation of EUR 16.77 billion.

On the news front, the Düsseldorf-based company, led by CEO Armin Papperger, continues to deliver as usual. The integrated technology group, in collaboration with a Ukrainian partner company, plans to build a new plant for the production of artillery ammunition in Ukraine.** Both partners are said to have signed a letter of intent at the recent security conference in the Bavarian capital.

The joint venture between the two partner companies plans to produce a six-figure number of projectiles annually in their factory. The German arms manufacturer established its first joint venture with a Ukrainian partner back in October of last year. The aim of this company is the maintenance and repair of tanks in Ukraine. According to Rheinmetall, there are also plans to produce armoured vehicles there in the future.

Almonty Industries - Profiteer of the turnaround

The order books of Western armaments companies are overflowing. The world needs more tanks and more defense systems to ensure peace. The increased need also means a growing demand for critical metals. One of these elementary raw materials is tungsten. However, as with many others, the dependence on China and Russia is overwhelming. The two countries dominate around 85% of global tungsten production, and the Western world's hands are currently tied.

Nevertheless, there is a ray of hope in South Korea, where Almonty Industries is gearing up for production at the Sangdong mine. At full capacity, this mine is expected to be responsible for around 30% of global supply outside China. The Sangdong deposit has a potential lifespan of 90 years and is to be expanded in two phases, with annual production ranging from 2.3 million tons to 4.8 million tons of tungsten oxide. On a positive note, the German KfW IPEX-Bank has assumed debt financing in the amount of USD 80 million. In addition, the Austrian Plansee Group, the largest single shareholder with a stake of over 15%, has an offtake agreement that will generate a cash flow of USD 590 million for Almonty Industries over the next 15 years. The German investment company Deutsche Rohstoff also holds a 12.65% stake.

Despite the excellent prospects, the market capitalization of the Canadians at a share price of CAD 0.61 is still CAD 146.53 million. However, further progress with regard to the start of production should push the share price higher.

On Wednesday, February 21, 2024, CEO Lewis Black will present live at the 10th International Investment Forum. Participation in the virtual event is free of charge.

Applied Materials - AI as a driving force

Nvidia, ARM and now Applied Materials - all companies are benefiting from the Artificial Intelligence supercycle that started in November 2022. The share price increases of the companies involved are breathtaking. Applied Materials, in particular, has risen by over 80% YOY and is trading at USD 199.57, its highest level since the IPO.

Applied Materials' figures for the past stock market year 2023 provided evidence of its enormous share price jump. The past quarter, in particular, was better than forecast for the US company. Compared to the previous year, a slight decline in sales was reported, although at USD 6.71 million, these exceeded analysts' estimates by USD 220 million.

Applied Materials also reported positive earnings of USD 2.13 per share, which was USD 0.22 above forecast. Compared to the same period last year, an increase of USD 0.10 per share was achieved.

The increase in profit with similar sales figures is primarily due to the 1.1% increase in the gross margin, which amounted to 47.8% in the quarter under review. For 2024, the US company expects revenues of USD 6.5 billion, which is USD 170 million above consensus estimates.

Rheinmetall is still on fire and is rushing from high to high. Due to the better-than-expected figures, Applied Materials is also at its highest level since going public. Almonty Industries is one of the beacons of hope in the battle for critical metals and should end its sideways movement if the construction of the tungsten mine in South Korea continues to develop positively.