11. October 2021 | 12:18 CET
Standard Lithium, Meta Materials, Varta - The race is still open!
Faster than expected, the shift toward electric drive is taking place among motorists. Political pressure and public opinion drive some car buyers to the alternative powertrain counter despite many technical hurdles. That is creating an increased demand for many critical raw materials, which is currently challenging to meet. As a result, prices for metals and battery materials have been going through the roof for several months now, and a veritable commodity inflation is spreading. We look at interesting investment opportunities.
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ISIN: STANDARD LITHIUM LTD | CA8536061010 , Meta Materials Inc. | US59134N1046 , VARTA AG O.N. | DE000A0TGJ55
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Standard Lithium - Huge lithium deposits in Arkansas
The new registration figures of the Federal Motor Transport Authority speak a clear language: In September, alternative drives showed strong growth. While new registrations of gasoline-powered cars were down 41.4% from a year earlier, new registrations of all-electric vehicles were up 58.8%. A total of 33,655 new electric cars were registered last month, while plug-in hybrids grew by only 13.5% to 22,842 units. Parallel to the red-green electoral success, there is now a noticeable turnaround in consumer behavior.
Lithium is one of the indispensable raw materials for e-mobility. Although there are enough deposits of the white metal on the planet, suppliers of the raw material are unable to meet the current high demand from the automotive industry. As a result, the price of lithium is rising sharply, reaching a new 5-year high of CNY 165,000 per ton of lithium carbonate.
Lithium extraction from hard rock projects fails because of many technical obstacles and the lack of refining capacity. Building new smelter costs between USD 300-500 million and is not viable for most smaller deposits. Standard Lithium of Arkansas, on the other hand, sits on a brine production area. The Company is currently focused on the immediate development of its flagship 3.14 million ton LCE resource-indexed joint venture project with Lanxess. The region in question hosts North America's largest area with more than 50 years of commercial production, significant infrastructure, abundant, low-cost electricity and access to water. The project is already permitted for extensive brine mining and processing activities.
Standard Lithium shares are feeling this demand-pull in the share price, increasing tenfold at its peak over the past 15 months. The stock is trading up an outstanding 380% for the year. In terms of valuation, the Standard Lithium share with a market capitalization of just under CAD 1.4 billion is certainly no longer a bargain. However, speculative investors will undoubtedly have fun with the volatile share.
Meta Materials - It is all about the surface
Another interesting player in the high-tech materials sector is Nova Scotia-based Meta Materials Inc (META®). The nanocoatings specialist produces a range of highly functional materials for cutting-edge industrial applications. The Company's proprietary technology platform includes three core competencies: holography, lithography and wireless sensing with strong IT networking and artificial intelligence (AI) embedding.
Meta Materials focuses on extremely thin nanoscale coatings that have novel optical, physical and magnetic properties. Since these are not found in nature, these technologies take us into entirely new spheres. For example, special coatings can be used to direct light around certain objects to change the refractive index into the negative. In this way, military vehicles can be camouflaged, or optical perceptions can be altered.
Since Meta Materials, with its future-oriented positioning, fits very well into the most modern high-tech applications, there was real hype around the stock at mid-year, with a market capitalization of more than USD 6 billion. The operating figures, however, are still not very meaningful. In the second quarter, the net loss reached USD 5.18 million on revenue of USD 624,320. This is not unusual because every free dollar currently flows into new ideas and patenting. These have to be pre-financed accordingly until finally, market-ready products can be brought to market. META® has thus had a broad and growing portfolio of intellectual property, patents and trademarks since its foundation.
The META® share is listed on Nasdaq and German stock exchanges under the symbol MMAT. It is very volatile and trades with good volume. On Nasdaq, the daily turnover is usually more than 5 million shares. The appearance of CEO George Palikaras on October 14 at the "International Investment Forum" could also be an exciting event. The share has been one of the tech shooting stars of 2021 since its launch.
Varta - The great wait for V4Drive
At Varta, the suspense goes on a bit longer. When will the new battery be introduced to the market, and will it deliver what it promises? As the market leader, Varta is already earning a lot of money with its small lithium-ion round cells called CoinPower. Now the battery manufacturer wants to head for the next growth market and, according to CEO Herbert Schein, bring a lot of performance to e-mobility. To do this, the Group is reverting to a principle that has already been successfully practiced: introducing real innovations into existing industrial manufacturing designs.
Intelligent battery solutions are the key to success in electromobility today. High energy density, ultra-fast charging capability and maximum flexibility in design are in demand. With the V4Drive high-performance battery, Varta already has the product on the drawing board. According to management, however, the first deliveries are not likely to come off the production line before 2024.
We had last seen the Varta share at a low of EUR 111, then the sentiment jumped back to buy, and just 2 days later, the share was again over 10% higher. We recently successfully recommended the zone of EUR 100 to EUR 115 as an entry zone, which worked well. We are extremely satisfied with the current fluctuation behavior from a trading point of view, but also sell it courageously above EUR 130. Because as long as the V4Drive does not come, we will not miss much fundamentally.
The investment theme of high-tech materials in the large context of renewable energies and e-mobility has become a perennial favorite for investors willing to take risks. In some cases, however, valuations have already advanced decently. Standard Lithium, Varta and Meta Materials are analytically highly valued but are always on the buy list in cyclical uptrends.