December 27th, 2021 | 07:53 CET
RWE, Memiontec, E.ON: You know what you've got here
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At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
RWE: Steps in the right direction
Between 2015 and 2021, RWE's share price more than tripled. In the meantime, a bit of calm has returned to RWE. The Company now earns around 83% from energy trading. The classic fields of activity, lignite and nuclear power, contribute little to the business. RWE is thus well positioned. The disadvantage of the energy trading business is its high volatility: sometimes RWE does well, sometimes less so. The Company wants to expand its share of renewable energy sources further and has announced some initial steps in this direction in recent months.
However, due to the growing regulatory pressure surrounding alternative energy sources and climate neutrality, RWE will have to stretch itself in the coming months and years. The dividend is a positive factor for investors - the utility pays out 2.8%. It may be negligible for growth-oriented investors, but the dividend remains one of the few arguments favoring the share for all long-term share savers. RWE is solid but not a high flyer. Only a big deal around new energy sources could boost the stock. The recent investment in EnergyTech envelio was a step in the right direction.
Memiontec: This utility is a quintuple
Asian water utility Memiontec Holdings has taken several steps in the right direction this year. The value jumped from 12 to around 60 cents between July and October. Currently, the stock is trading stably between 40 and 50 cents, suggesting great relative strength. Memiontec offers complete solutions for water purification in Indonesia, Singapore and China. Especially in Indonesia, the Company has longstanding business relationships. Supply contracts often have terms of 25 years.
The Company is benefiting from the growing importance of water treatment. Even though this is nothing new for us in Germany, water purification is considered a growth market in Asia. A lot of wastewater still flows into the rivers there. However, the growing danger of epidemics and the increasingly crowded living conditions in the course of urbanization make urgent action necessary. Even though Memiontec's share price has already risen sharply, the Company is not an inflated stock. The Company pays a dividend and intends to stick to this strategy. With a market capitalization just into the three-digit range, Memiontec cannot be compared with RWE, but it also offers a solid core business. Those who do not shy away from investments in Asia should take a closer look at this share.
E.ON: This signal could be worth its weight in gold!
In contrast, E.ON's share price has been relatively sluggish - and has been for years. Today, E.ON is, first and foremost, a network operator. It has always been known that energy networks are important. With the growing importance of renewable energy sources, such as offshore wind farms, gigantic power lines are becoming even more important. The political environment, therefore, appears positive for a company like E.ON. Although the stock did not move for a long time, it still offers more than a 4% dividend yield. Most recently, it also managed to break out above a longstanding resistance area at EUR 11.30. E.ON could pick up speed. This stock is also suitable for the watch list.
Whether a German utility with a dividend guarantee or an Asian growth company with years of experience and long-term business relationships: Utilities do not have to be boring. While stocks such as RWE are rightly falling out of favor with investors, newcomers like Memiontec show that rich returns are also possible with utilities.
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