June 27th, 2022 | 13:39 CEST
SAP, Kleos Space, RWE - Crisis-resistant stocks that belong in the portfolio
Table of contents:
SAP - Insider buying
SAP software is now standard in many medium and large companies. Now that many companies are facing challenges, the efficiency of business processes needs to be optimized again to a greater extent. Digitization is the magic word. In this context, the SAP Group benefits from the fact that companies that have once taken the step with SAP can hardly do without the software. The Walldorf-based Company's business can therefore be described as crisis-proof. However, new customer business may decline in times of impending recession.
The news surrounding the Group is also rather negative at the moment. According to the consulting firm Universum, SAP has fallen behind in the ranking of the most popular employers among students. According to Manager Magazin, the mood in management also seems to be negative. CFO Luka Mucic will leave the Company next year because his communication with the capital market was deemed too poor. Most recently, it became known that the hedge fund Bridgewater is betting on falling prices at SAP. In total, shares worth almost EUR 600 million were shorted.
That could be the reason for the pressure on the share. Blackrock has also slightly reduced its stake in the Group to 5.1%. Since the end of May, the share has been pushed down to EUR 86.40. Since then, a countermovement has set in, driving the share up to EUR 92.33. Above EUR 95, the share would have freed itself from the downward trend for the time being. In the area of EUR 90.00, however, insider buying has been seen again and again since May. Analysts have also been optimistic since May and have issued a series of buy recommendations with price targets between EUR 120 and EUR 146.
Kleos Space - The launch date for the fourth cluster is set
With the outbreak of the Ukraine crisis, the world is again in armament mode. Besides weapons, data is of utmost importance. Kleos Space operates satellite clusters and uses them to collect radio frequency (RF) signals. Using artificial intelligence, the Company can provide its customers with RF geolocation data for reconnaissance, surveillance and monitoring as a Data-as-a-Service. The Company thus helps in the fight against global environmental, security and economic problems. Currently, three satellite clusters, each with four satellites, are in space and will provide daily data from an overserved 253 million sq km. The third cluster, Patrol Mission, launched in April, is expected to be operational by the end of August.
On June 16, the Company announced the launch of the fourth cluster with SpaceX. The satellites will launch from the Cape Canaveral Space Station in October 2022 and add about 119 million sq km of data collection capacity. At the same time, the daily verification rate may increase fivefold. The cluster was initially scheduled to launch in the middle of the year, but due to vibration problems, the launch was postponed for safety reasons. Nevertheless, CEO Andy Bowyer is pleased: "The upcoming launch increases our constellation in low Earth orbit to 16 satellites, further enhancing our data collection, intelligence and reconnaissance capabilities."
A cooperation agreement with the US Navy's Naval Surface Warfare Center shows just how good the data is, with both parties looking to develop new solutions to military challenges. In line with this is Kleos' new Mission-as-a-Service business, which will give customers exclusive access to satellites. This service is scheduled to launch in the first quarter of 2023. At the beginning of April, the share was still at EUR 0.48, then fell to EUR 0.245 with the news of the delayed satellite launch. However, postponed is not cancelled, and the safety of the satellites comes first. Turnover is only just starting to pick up and it is currently possible to get in at favorable prices.
RWE - All eyes are on the lawsuit at the European Court
The Ukraine crisis is also making itself felt at energy supplier RWE, but unlike many other groups, it is having a positive effect. Energy is scarce, gas supplies have been throttled by Russia, and so coal-fired power plants are to provide the electricity that gas-fired power plants would otherwise have produced. The aim is to avoid a supply shortage of gas. Even an extension of the nuclear reactors is being discussed. No matter how it turns out, RWE should profit in the end because electricity consumption is growing, as many of the new cars will be electric in the future.
In the fall of 2019, EON and RWE had agreed to break up Innogy and distribute its business units. RWE thus covers the various areas of power generation. The Group is particularly well-positioned in the field of renewables. In 2020, 11 municipal utilities filed an action for annulment with the European Court to declare the transaction void. Results from the hearing, which began on June 16, have not yet leaked. However, it is unlikely that the deal will be reversed.
Otherwise, things are going well for the Group, which was able to commission a 196-megawatt solar park on June 23. The Company is also active in the hydrogen sector. At the beginning of June, RWE invested EUR 500 million in a 1.4 gigawatt power plant for a hydrogen hub, followed most recently by the news that it plans to produce green hydrogen in a 100 megawatt plant in Rostock. Then there is the cooperation with Arcelor Mittal. In May, some corporate bodies also bought their own shares. Recently, the share has been under pressure and is currently trading at EUR 37.42, which is a good EUR 6.50 below the high for the year set in May. The next support area is at EUR 32.52.
The long-term prospects for all three companies are good. SAP is able to convince more and more customers of its cloud business. Kleos Space aims to generate USD 18 million per year by the end of the year. This revenue is recurring, and customers can be added. Even more so, data from this business will become even more valuable in the future. RWE is very well positioned in terms of power generation. Electricity prices will remain high, which will ultimately benefit the Group.
Conflict of interest
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