19. May 2021 | 08:59 CET
Steinhoff, Scottie Resources, Barrick Gold: Dynamic growth lurks here
Small caps offer great growth opportunities. This is the conclusion of economic studies on the size factor. The smaller a company is, the more likely it is that operational changes will have an impact. Ultimately, this can even lead to shares multiplying. If you enter such stocks at a low level, you have a good chance of attractive returns. We explain which small stocks currently offer potential.
time to read: 3 minutes by Nico Popp
"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
Steinhoff: Who invests in furniture?
The Steinhoff share has been something of an investor darling for months. Why? The share is cheap and is currently trading at around EUR 0.11. A few years ago, an accounting scandal rocked the furniture group. Since then, the Company has been in a legal battle. Disgruntled investors want money from Steinhoff. Steinhoff does not want to and cannot pay. In the meantime, both parties are struggling to find a solution. A settlement is in the air. Time and again, there are water status reports and legal interpretations surrounding the case. Sometimes insurance companies give positive signals; other times, Steinhoff realizes fresh funds from investments. The assumption of many investors around the share is clear: Provided that the legal dispute is settled, Steinhoff can resume its activities. But will it come to that?
Even a settlement with the plaintiffs is likely to be expensive for Steinhoff. While planning certainty is a high commodity on the stock market, investors should ask themselves what will come after a possible end to the legal dispute. Will Steinhoff convince the market with its operating business and provide growth? More likely, no. Most Steinhoff investors would have given the furniture stock a wide berth if it weren't for the existing legal dispute. The story is somewhat reminiscent of the German kitchen manufacturer Alno a few years ago. At that time, a turnaround was in the air for months - until the Company finally went off the market. Kitchens and furniture, in general, are not an exciting investment topic. Even a legal dispute is more of a reason to sell a share. The Steinhoff story is currently hardly convincing investors. The air is out.
Scottie Resources: Well positioned player in the "Golden Triangle"
The share of the Canadian gold Company Scottie Resources is also down - since last summer, the value has corrected from EUR 0.33 to EUR 0.14 in Germany. But unlike Steinhoff, Scottie is not in a multi-billion dollar legal battle, nor is it selling furniture. Scottie Resources is an exploration company around gold. Scottie has become a significant player in the Golden Triangle of the Canadian District of British Columbia in recent weeks, acquiring AUX Resources via a share swap. AUX Resources was active in the same region and the existing properties are complementary. Furthermore, Scottie Resources recently raised fresh capital and is pleased to have CAD 5.4 million in its coffers.
Thanks to the acquisition of AUX Resources and the fresh capital, Scottie can start drilling and continue to advance the Golden Triangle properties. Only recently, Scottie CEO Bradley Rourke emphasized that the acquisition of AUX was not a quick fix but a well-considered move - there had already been personnel overlaps between the two companies before. Rourke is confident that Scottie Resources could be of interest to any major companies new to the Golden Triangle. The stock is promising given the consolidation of the price and the rising price of gold. While gold producer prices have already jumped in the face of rising gold prices, smaller developers could be laggards.
Barrick Gold: What is still to come?
The fact that gold is once again an issue on the market can also be seen from the price trend of Barrick Gold. In the past five days alone, the thick ship in the sector has risen by more than 5%. But how promising is the share really? Over the past year, the stock has lost almost 20%. Last year, investors complained that Barrick was investing too little. The Company had a significant free cash flow. But since no acquisitions followed, shareholders became restless and were not convinced by a special dividend.
Barrick Gold is in itself a solid fundamental investment. However, the share sticks to the gold price and only rises marginally more. Only an acquisition could breathe fantasy back into the share. However, since this has already failed in 2020, investors should wait and see. In contrast, smaller companies, such as Scottie Resources, could offer better opportunities. Here, investors may not be investing in numerous producing mines, but they are investing in a promising land package. The shares of Scottie Resources are valued at around EUR 20 million and offer price momentum.