29. October 2021 | 11:25 CET
Steinhoff, Triumph Gold, TUI - Which stock will jump first?
Inflation is in full swing, and it isn't easy to protect yourself and your money from it. Real estate in Germany is often far too expensive, and as a small investor, such an investment is out of the question. Gold has always been used to protect against inflation, but even there, you can only buy anonymously for less than EUR 2,000. Otherwise, the identity must be deposited. Government bonds no longer yield interest, so the only option left is stocks. As an investor, one is always on the lookout for securities that have upside potential. That is where shares with an interesting story or turnaround candidates come in. We analyze three companies today.
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ISIN: STEINHOFF INT.HLDG.EO-_50 | NL0011375019 , TRIUMPH GOLD CORP. | CA8968121043 , TUI AG NA O.N. | DE000TUAG000
"[...] Our SMSZ project is the largest contiguous land package of any exploration company in the region at 400km2 and overlays a 38km portion of the prolific Senegal Mali Shear Zone. [...]" Jared Scharf, CEO, Desert Gold Ventures Inc.
Steinhoff - Waiting for January
Steinhoff is a turnaround candidate fighting insolvency since 2017 and may now be able to find a settlement with creditors. In total, its debts amount to a good EUR 11 billion. Since September 3, creditor meetings have been underway in Amsterdam and South Africa, and each water level announcement caused increased volatility in the stock. While there was a green light for the settlement in the Netherlands, there is still a hitch in South Africa.
In South Africa, the former owners of Tekkie Town, who were paid in Steinhoff shares, have filed for liquidation. Steinhoff had tried to challenge the jurisdiction of the court but failed in the Constitutional Court. Since October 14, it has been clear that the Western Cape High Court will not deal with the application until the end of January. That means a further test of patience for shareholders.
One positive sign from South Africa is the release of liquid funds by the central bank. Operationally, things are going well at the Company. The third-quarter figures confirmed the growth from the previous quarter. Compared to 2020, all business areas increased between 12 and 28%. The share is currently trading at around EUR 0.14. As an investor, you should put your money elsewhere until there is a decision on the future.
Triumph Gold - Waiting for the results of the drilling program
If one wants to invest as an investor, not only in physical gold, one can invest in promising explorers like the Canadian Triumph Gold. Here there is already a proven gold and copper deposit, which is quantified with 2 million ounces of gold and copper according to NI 43-101 standard. The main project, "Freegold-Mountain," is located in the Yukon and is surrounded by large mines owned by Rio Tinto and Newmont. Newmont is also a strategic investor in Triumph Gold, holding 12% of the shares.
From late June to September 8, the drilling program at Freegold Mountain was underway. A total of 19 holes were drilled with a total length of 6,615m. The Company relied on artificial intelligence to select the targets. Vectoring, i.e. the link between structural geological features and mineralization processes, is used to predict targets. Samples from the drilling are currently being analyzed by ALS Global and should be released in the coming weeks. What is already certain is that the Company has found new mineralization.
On September 21, former senior geologist Brian May was named the Company's new president. The stock stood at 0.45 Canadian dollars (CAD) last year when gold reached its all-time high. Currently, the stock is trading at CAD 0.16. Due to the proven gold and copper deposits, the drop in the share price should be limited. If the drill results are positive, a resource expansion could be on the cards. The share belongs on the watch list.
TUI - Capital increase successfully completed
TUI is a special case in restructuring stories because the Company has received help from the state. While Steinhoff has to fight for survival on its own, as described above, this risk seems to be excluded for TUI. The tourism giant has suffered more than almost any other from the Corona pandemic. But the industry is still relying on life getting back to normal. Vaccinations have made things better, but there is still a long way to go until things are where they were before Corona. In any case, hopes of a major recovery through the summer vacations have been dashed due to rising Corona figures.
On October 6, the second capital increase this year was announced. This time, the Group raised EUR 1.1 billion. On October 28, the capital increase was successfully completed. Major shareholder Mordashov, who already held 32% of the shares, also made full use of his subscription rights. According to company reports, he had already purchased further shares on the stock exchange on October 25. He is now said to hold 33%. Other positive news is that the USA will allow travel from Europe again as of November 8. The US is a major travel destination, which could generate new sales.
The stock marked a new low for the year at EUR 2.492 on October 21. Since then, the share has been going uphill, and a double bottom may have been formed. A setback must not bring the share below EUR 2.49; otherwise, a test of the EUR 2.00 mark is likely. It is good that the share is supported by both the state and the strategic investor. As an interested investor, you should keep an eye on the Corona situation.
All three companies have very different conditions. Steinhoff's continued existence is in the hands of the courts. At Triumph Gold, proven gold and copper deposits exist, and results are pending that could boost the share price. TUI is currently dependent on Corona-related travel regulations, and the pandemic is not exactly creating travel enthusiasm. In the short term, Triumph Gold has the most potential.