June 23rd, 2022 | 12:59 CEST
SPD's Klingbeil: Germany as a "leading power" - Rheinmetall, Kleos Space, Airbus
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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.
Rheinmetall: New high - what is next?
The Rheinmetall share is one of the top choices for German investors when it comes to armaments. In addition, the Company also benefits from its business with the automotive industry. The share recently reached a new all-time high and crashed soon after. However, if we look at the price trend from a medium-term perspective, the recent minor setback is not a cause for concern. After shares form a new high, it is not unusual from a chart perspective that they initially correct to the level of the previous high. If this previous high is not undercut, it becomes a support zone - and the price turns upward again.
In view of the tailwind for arms spending throughout Europe and the now also clearer signals from the partly pacifist governing party SPD for more military involvement in Europe, Rheinmetall should be promising. The war in Ukraine could last longer than expected and result in an East-West tension similar to the Cold War, characterized by armament. Rheinmetall is perfectly positioned to profit from this.
Kleos Space: Satellite data as a growth area
One company that should benefit from increased arms spending, just like Rheinmetall, but at the same time has a digital business model is Kleos Space. Kleos Space operates several satellite clusters that orbit the earth and monitor radio activity. Using its software, it manages to evaluate this radio activity and extract information from it. The aim is not to eavesdrop on people but to predict certain events. This could involve the movement of pirates, for example, or people smugglers trying to circumvent border controls. Kleos Space also works with intelligence agencies and other security authorities. In October, the Company plans to use SpaceX's planned rocket launch to put a fourth satellite cluster into orbit.
Kleos Space will then cover 119 million sq km of territory daily and fly over prominent regions up to 5 times a day. So far, Kleos Space has already focused on promising regions and has cooperation partners, such as the US Navy. Kleos Space has entered into a research and development agreement with the military, which will incorporate data collected via satellites to gain new insights in the areas of reporting, embargo, search and rescue, smuggling, fishing, border control and resource management. Kleos Space's stock has recently declined and is trading well below its high. The share price decline is due to Kleos being a growth company, and some investors have turned their backs on this sector. Those interested in the business model and who see a future in it can look for an anticyclical entry at the current level.
Airbus wants a big piece of the 100 billion pie
The development of Airbus shows that not everything is running smoothly, even for the big players in the sector. The share has lost around 9% of its value on a three-month horizon. However, the ILA air show in Berlin-Schönefeld, which began on Wednesday, could provide a tailwind. The focus this year will be on combat helicopters and transport aircraft. The A380, which has already been partially phased out, is also expected to take off. Although Airbus CEO Michael Schoellhorn expects his Company to receive a "fair share" of the planned EUR 100 billion in special funds for the German Armed Forces, there will be no significant impetus for the share price.
The fact that investments in the military are not a foregone conclusion, even for companies, is shown by the example of the Airbus share. On the other hand, Rheinmetall looks better and could soon reach a new high. If the mood among major defense companies brightens, second-tier stocks will likely follow suit. As an innovative data provider with satellites in orbit, Kleos Space could become exciting again in the medium term. However, investors should be aware that this is a growth company.
Conflict of interest
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