Short-Term Politics, Long-Term Megatrends: Investing in NEO Battery Materials, RENK, and TKMS for 2026!

NEO Battery Materials – Groundbreaking developments

The big picture, with its complex framework conditions and ongoing developments, combined with the Company's clever corporate strategy, positions the Canadian company as an attractive investment on several levels. The shares have performed well in recent weeks, ending a short-term consolidation phase. At the current price of CAD 0.64, NEO Battery is valued at around CAD 90 million, which appears moderate given its diverse potential.

A few weeks ago, China, the dominant global player, announced measures to tighten controls on exports of lithium-ion batteries, key materials, and production technologies. These developments reinforce the desire and need for non-Chinese supply in the battery industry and secure supply chains, which plays into the hands of NEO Battery Materials.

The Canadian company specializes in silicon-enhanced lithium-ion technology, which is characterized by higher energy densities, ultra-fast charging times, and significantly better cycle stability. With its proprietary and patented NBMSiDE® anode, NEO addresses applications ranging from electric vehicles and grid storage to robotics and defense technology.

In order to operate more quickly, with less risk and at significantly lower cost, the Company recently leased an existing production facility in South Korea. The focus is on manufacturing high-quality battery products using proprietary technology and the Company's own expertise.

Two well-known Fortune 500 automakers, one from Asia and one from North America, recently placed their first orders for batteries for their testing and evaluation pipelines – an impressive signal.

The list of other orders and partnerships from last year is long. We consider the recently concluded partnership with the Korea Institute for Defense Industry (KOIDI), an organization recognized by the Ministry of Defense, to be particularly interesting. A joint task force is intensively dedicated to the topics of batteries for drones and unmanned systems. This could soon open the door to the defense sector for the Canadians.

Western military and security actors consider critical metals and solutions for batteries and energy storage used in modern weapons systems as strategically important. The US, Canada, Australia, and other Western countries are specifically promoting investment in local raw material and battery production, as well as related technology solutions. It is likely only a matter of time before NEO also benefits from this demand.

https://youtu.be/tCj7nnX_KLE

RENK – Strong competitive position as basis for further price increases

Electrification and hybridization are a major trend in the defense sector. The requirements for drones in terms of quiet operation, low heat signature, and greater autonomy are increasing enormously. This also means higher demands on batteries: more capacity, a higher number of charge and discharge cycles, improved materials, and innovative approaches.

RENK is known for its high-performance transmissions for tanks, military tracked vehicles, and naval applications. Hybrid and electric drives are playing an increasingly important role. In several key niches, RENK holds a very strong competitive position, which is reflected in the stock's outstanding performance among German defense companies over the past year.

The future looks bright for RENK, as geopolitical tensions and high defense budgets are filling its order books. A few months ago, the Company announced an ambitious medium-term outlook. By 2030, the group is aiming for revenues of between EUR 2.8 and 3.2 billion. Acquisitions could increase revenue by up to another EUR 1 billion. The share is currently trading at around EUR 55, giving the Company a market capitalization of around EUR 5.6 billion. Analysts believe the shares have upside potential of a good 20% over the next 12 months.

TKMS – Surprise potential in 2026?

At the beginning of the year, TKMS shares were among the best performers among German mid-caps. At a current price of just under EUR 70, the Company is valued at around EUR 4.4 billion. Is that too much? The valuation reflects twice the revenue of the past fiscal year, which included several highlights such as a 53% increase in adjusted EBIT to EUR 131 million and a high free cash flow of EUR 784 million. Analysts are setting price targets around EUR 80. Given the recent momentum in orders, a sixfold increase in the last fiscal year, and an order backlog of EUR 18.2 billion, experts may well have to revise their price targets upward soon.

The Germans are a leading global manufacturer of submarines. As a systems integrator, the former naval division of the thyssenkrupp Group, which has only been listed on the stock exchange for a few months, is increasingly combining submarines and warships with autonomous, battery-powered drones. Above-water and underwater drones are a central component of TKMS's future naval concepts. High-performance energy storage systems are considered a key technology in this context.

NEO Battery Materials addresses several key demand drivers and structural megatrends and differentiates itself through its innovative approach. This is offset by a market capitalization of only CAD 90 million. According to analysts, RENK and TKMS have further upside potential.