December 1st, 2020 | 09:32 CET
SAF-Holland, ElringKlinger, Almonty: cyclical for the year-end rallye
Table of contents:
SAF-Holland and the advance praise
SAF-Holland presented weak figures for the first half of the year, losing ground in all regions and across all business units, particularly in the wake of the pandemic. However, necessity is the mother of invention: The Company cut costs in sales and administration and made diligent savings. Nevertheless, the outlook remains subdued.
SAF-Holland's shares are one of those cyclical stocks that are not yet really on track operationally. The price gains on the market are mostly early praise. The value may be interesting for gamblers, but those who are looking for substance are better to wait a little longer.
ElringKlinger: 75% in one month
The ElringKlinger share is likely to be even more in the focus of speculative investors. The specialist for cylinder-head gaskets and other parts relating to engines, transmissions and exhaust systems, is the epitome of the German supplier: its products are of a high standard and rightly in demand worldwide. However, classic engines are also a thing of the past. For this reason, too, ElringKlinger's shares were worth just EUR 3.80 in mid-March. But these times are over: Today, the share is quoted at around EUR 13.
Last month alone, the share price rose by a breathtaking 75%. But how long has this trend been going well? With share price rallies of this kind, the principle quickly applies: "The last one bites the dust." Hardboiled gamblers should secure positions and continue to observe the situation on the market. If the mood remains rosy, even automotive suppliers can be good for a few percent.
Almonty represents tungsten outside China
One share that is also related to the automotive industry in a broader sense is that of the tungsten producer Almonty. The Company operates two tungsten mines in Spain and Portugal which is a ray of hope given the market dominance of China. China supplies around 80% of the world's tungsten production. The industrial metal is used, for example, in filaments in car windows, where it ensures that these can be heated and freed from ice. Tungsten also plays a role wherever corrosion protection is essential, for example, in chemical plants. Furthermore, tungsten in alloys ensures that these become heat-resistant. Tungsten is therefore also used in engines.
In addition to the two existing mines in Southern Europe, Almonty has already begun building its mine in South Korea. Once complete, 30% of non-Chinese tungsten production will be extracted from here. Production at the Sangdong mine is scheduled to start in 2022. Almonty is collaborating with Deutsche Rohstoff AG and intends to advance the project rapidly. The preliminary work is currently ensuring that Almonty is in the red, but this is likely to be temporary. The market is presently interpreting the situation similarly: the share has bottomed out in the range of EUR 0.40.
Base metals attractive looking to 2021
Given the dizzying heights to which cyclical stocks such as automotive suppliers have risen, Almonty's stock currently seems anything but overbought. Although Canadian mining stocks are often under pressure in December in the wake of tax-driven sales, base metals stocks could offer opportunities in a friendly market environment looking ahead to 2021.
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