August 23rd, 2024 | 07:00 CEST
Share price jump and share buyback! Rheinmetall, Barrick Gold, Globex Mining
When will the consolidation of Rheinmetall shares end? After jumping to a new all-time high last week, the share price has gone into reverse gear this week. News from Germany and Poland is unsettling investors. What do analysts say? In contrast, Barrick Gold is doing well. Following convincing quarterly figures, the share is on the verge of breaking through a long-standing resistance level. Globex Mining is also benefiting from the gold boom. The mining incubator is impressing with a positive news flow. Can the share buyback program boost the share? Experts see an opportunity for outperformance.
time to read: 4 minutes
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Author:
Fabian Lorenz
ISIN:
RHEINMETALL AG | DE0007030009 , BARRICK GOLD CORP. | CA0679011084 , GLOBEX MINING ENTPRS INC. | CA3799005093
Table of contents:
"[...] We are convinced that we could already leverage significant potential with a drilling program of around 35,000 meters. However, to finance this, we need a decision. Fortunately, there are already interested parties who can imagine advancing Barsele together with us. [...]" Gary Cope, President and CEO, Barsele Minerals
Author
Fabian Lorenz
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
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Barrick Gold: Will it make the leap above EUR 18?
Barrick shareholders have been waiting since 2023 for the share price to make a sustained leap above the EUR 18 mark. After failing to do so on several occasions, factors like the gold price, the Company's operating performance, and news from China are now in play. In the second quarter - when gold prices were still low - Barrick increased revenue from USD 2.8 billion to USD 3.2 billion. Net profit even climbed from USD 305 million in the same period of the previous year to USD 370 million. The precious metal's price is now around 10% higher than Barrick's average selling price in the second quarter. The Company is accordingly optimistic for the second half of the year.
And the price of gold will likely continue to drive producers and explorers because, as has now become known, China has been holding back on purchases for several months. The fact that the price of the precious metal has risen to a record high indicates a sustainable development.
Demand from China could soon pick up again. Reuters reports that several Chinese banks have received new quotas for gold imports from the central bank. These quotas have been paused in recent months. Numerous experts have attributed the sharp rise in the price of gold this year to massive purchases from China. According to the report, the Chinese central bank is still the largest buyer of the precious metal, but is not acting nearly as aggressively on the global market as assumed.
Globex Mining: Potential for Outperformance
Globex Mining should also benefit from a rising gold price. The Canadian mining incubator offers investors a unique diversification across a wide range of commodities - from precious metals such as gold and silver to rare earths and lithium. In recent years, the Company has acquired numerous exploration projects and abandoned mines, building up a portfolio of over 250 projects. Globex makes the projects available to other companies for exploration. In return, the Canadians receive cash, share options, and subsequent royalty payments. This effectively outsources the costs and risks associated with exploration.
While the news flow from the projects in the current year is convincing, the Globex share is trending sideways. From the management's point of view, this presents an opportunity to buy back shares at a favorable price, which is why a share buyback program was recently approved for the next 12 months.
The experts at (researchanalyst.com) also see the potential for an outperformance of the Globex share. They highlight the large number of high-quality projects across the entire commodities sector and the prospect of promising deals. They also point to the last bull cycle in spring 2022. At that time, Globex shares rose to CAD 1.70. It is currently trading at around CAD 0.90 and is operationally much further along than it was then.
Rheinmetall: Share with a further 30% potential?
It still sounds paradoxical, but for some investors, defense stocks are the new safe haven. The performance of the Rheinmetall share supports this view. In the current year alone, the shares of Germany's largest armaments company have gained around 80% in value. Just last week, the share reached a new all-time high of over EUR 560 following convincing figures and the announcement of a billion-dollar takeover in the US. **However, this week also shows that the share price level offers little scope for setbacks. Investors reacted to the news that the German government's new budget plan provides little scope for military aid for Ukraine by selling shares. Even though politicians shortly afterwards reaffirmed their unwavering commitment to continue supporting Ukraine. The cancellation of an order from the Polish government also caused disgruntlement. The artillery ammunition ordered was to be produced by a Rheinmetall joint venture partner in South Africa. However, the South African government is preventing the export because it fears Poland will pass the ammunition on to Ukraine. Although the news from Poland is likely to have only a minimal impact on Rheinmetall's overall business, it demonstrates how sensitive investors are reacting at the current price level.
Analysts are currently less sensitive. The experts at Hauck Aufhäuser are particularly bullish. They highlight the strong figures, sensible takeover, and interesting partnerships with Leonardo and Lockheed Martin. The analysts, therefore, recommend the Rheinmetall share as a "Buy" with a target price of EUR 680.
Defense and commodities stocks are likely to remain among the favorites of investors for the rest of the year. In the commodities sector, Globex Mining offers catch-up potential and, at the same time, risk protection through diversification and a share buyback program. The chart for Barrick Gold is very exciting. Significantly higher prices are possible if it makes a sustained leap above EUR 18. According to the analysts at Hauck Aufhäuser, the Rheinmetall share has almost 30% upside potential.
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Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
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