March 17th, 2021 | 07:30 CET
Royal Dutch Shell, Pollux Properties, Fresenius SE - Value stocks with some catching up to do!
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The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
ROYAL DUTCH SHELL PLC - Oil multinational in Joe Biden's Green New Deal jam
There's no question about it: Corona has taken a heavy toll on the shares of oil multinational Royal Dutch Shell. For a long time, the Group's share price moved more or less in line with the Euro Stoxx 50. In February 2020, the stock quickly lost half its value and was hit much harder than the overall index. While the latter almost completely compensated for the loss, Royal Dutch Shell's price, currently around EUR 18, is still far from the pre-Corona value of just under EUR 27.
There are certainly several reasons for this development. The abrupt suspension of the share buyback program and the first cut in the dividend by two-thirds since the end of the Second World War, which until then had been the unchallenged dividend king, probably upset many shareholders. Also, a change in political mood had already been emerging in the US since mid-2020. And then the likely winner of the presidential election, Joe Biden, made no secret of his plans: he promised his voters nothing less than a Green New Deal, climate neutrality by 2050. It seemed clear that the sums of the announced two-trillion-dollar aid package would not reach the oil producers. So instead, investors preferred to bet on green tech.
But will this make oil companies obsolete overnight? There are still 30 years until 2050. In the meantime, oil demand will certainly not collapse immediately. And the companies will also be actively involved in e-fuels, i.e., synthetic, climate-neutral fuels. Reasons enough to use the current share price weakness for an analysis. The analysis shows that Royal Dutch Shell is currently very favorably valued with a price-to-sales ratio of 0.94. Like most analysts, we believe that Royal Dutch Shell is a good investment and we expect the share price to recover in the long term.
POLLUX PROPERTIES LTD - The immortal twin defies the crisis
Greek mythology is a treasure trove of the most incredible stories. The legend of Castor and Pollux, for example, is about an inseparable pair of twins with different fathers. One, Castor, mortal, the other, Pollux, immortal. After his cousin killed Castor in a quarrel, Pollux begged his father Zeus to share his immortality with Castor. Zeus was moved and granted the wish. But to achieve this, Pollux had to agree to spend one day each in Olympus and one day each in Hades with his brother, aging like a human and ultimately dying like a human. Let us hope that the real estate developer Pollux Properties from Singapore will be spared this fate for the foreseeable future.
And despite the turmoil triggered by Corona in the Singaporean stock market, the Company has managed to hold its own. Since August 2020, the share price has been on an upward trend. Looking at the corporate structure and the key figures, it quickly becomes apparent that this is a solid company that is still valued far too low. The price-to-book ratio is only 0.48. Thanks to its three pillars of real estate development, management of its own real estate portfolio (around EUR 125 million in real estate value) and fund management (around EUR 6 million in assets under management), the Group has succeeded in increasing sales by around 6% year-on-year.
To strengthen the financial power, the distribution of a dividend for 2020 was waived. The Company is currently sitting in a cash position to the equivalent of EUR 7.2 million. These are the best conditions to profit from the real estate boom in Singapore in post-Corona times (price increase approx. 13% p.a. over the last 5 years). Smart investors recognize that even a penny stock can be a valuable investment and buy accordingly at the current price level.
FRESENIUS SE & CO KGAA - Is there light at the end of the tunnel?
The global health care group comprises 4 business segments that operate independently in the market: Fresenius Medical Care, Fresenius Kabi, Fresenius Helios and Fresenius Vamed. The Group offers a wide range of products and services for dialysis, hospital and outpatient medical care. Other areas of activity include hospitals' operations and various services for hospitals and other health care facilities.
Since the highs of around EUR 79 in the summer of 2017, the stock has fallen continuously to just around EUR 36 today. Before Corona, the share price had stabilized at around EUR 45. It seems that investors did not give the Company the necessary confidence to start an ad hoc share price recovery. The poor growth rates and the high level of debt have not necessarily helped to regain trust.
However, the share price is so low that one should become alert from a value investor's perspective. The price-to-sales ratio is now only 0.55. The majority of analysts also believe that the current price is far too low and recommend buying. Insiders, by the way, seem to see it the same way: In any case, the number of insider dealings jumped after the Corona crash. Long-term investors should also jump on the bandwagon.
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