June 21st, 2021 | 13:32 CEST
Royal Dutch Shell, Sierra Growth, Nel ASA - Stocks with increased profit opportunities
Table of contents:
Royal Dutch Shell - A favorable dividend stock
Oil prices marched to their highest level in 2 years last week. One would think that the Royal Dutch Shell share should also be somewhere around its 2019 highs. However, that is not the case. In June 2019, the share was quoted at around EUR 28.50. Currently, it is only EUR 16.50. One reason is the recent court ruling against Shell in the Netherlands in which the Company is required to improve its CO2 balance by 45%.
Many forget that the ruling will not open up any new oil fields for the time being, as was already called for in the IEA study. The old oil fields inevitably produce less over time, which means that the oil supply will be less, so the price will rise. At the same time, crude oil inventories in the US have fallen by 8.5 million barrels. The declining pandemic is not decreasing demand either; the opposite is true.
The increased oil price is flushing money into the coffers to drive forward the restructuring of the Group, e.g. expansion in the area of renewable energies. A P/E ratio of 8 is not typical for such large companies. Although the Group had to cut its dividend for the first time last year, the dividend yield is over 3%. Some analysts have issued price targets between EUR 25 and EUR 28. We believe that oil will be needed for a long time, and Shell will benefit from this.
Sierra Growth - Just before the news
Sierra Growth is a junior exploration company primarily engaged in the acquisition, exploration, and development of early-stage mineral projects focusing on gold, silver, copper, and molybdenum. The focus is currently on the main project in Nevada, but the Company is also active in Peru. On March 15, the Company announced the acquisition of three projects from Primus Resources.
The most interesting of the three projects is the Mildred Mine area, called Mildred/B&C Springs, where grab samples of up to 667 grams per ton of gold and 78.6 grams per ton of silver have been found. Additional copper was found up to 6.3%, zinc up to 8.36%, and lead up to 3.06%, among other elements such as tungsten. Strong gold and silver anomalies were found on the Glitra/Sat property. The Betty East project boasts up to 646 grams of silver per ton and 0.53 grams of gold per ton.
On May 25, it was announced that exploration work had been completed. A total of 1,805 soil samples have been collected from the 3 areas. Efforts have been made to test the properties in preparation for a resource estimate thoroughly. The results of the samples are expected in late June/early July. After the announcement of the acquisition of the three projects, the share price skyrocketed to CAD 0.25. Currently, one can buy the share for CAD 0.15. If the Company can deliver good results, a jump in the share price should be possible.
Nel ASA - Well positioned for the future
Nel ASA's quarterly figures caused the share price to fall from NOK 24 to NOK 16. The main reason for this was probably the poorer EBITDA. Although sales increased by 24% to NOK 156.9 million, the loss increased to NOK 74.3 million compared to a loss of NOK 64.6 million in the first quarter of 2020. On the positive side, the order backlog was a record NOK 1,085 million. Cash is still well-filled at NOK 3.25 billion.
So, where does the European darling of the hydrogen industry go from here? The US has ambitious goals in the hydrogen sector and wants to provide financial support to companies in the US to achieve them. Nel ASA will not benefit directly from this, but the Company can hope for funding from the German government's H2Global Initiative. Currently, a fully automated electrolysis production plant is being built in Heroya.
Meaningful partnerships have been established, including Aibel, which has a lot of experience in larger construction projects, or Wood Consulting, which operates internationally. The positive voices of the analysts are also slowly increasing so that one should have the share on the watch list. Currently, the share is in a sideways phase between NOK 16 and 18.75. An upward breakout has the potential to reach NOK 27.
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