THREE HIGH-FLYERS IN CORRECTION MODE: IS IT WORTH BUYING ALMONTY, FRIEDRICH VORWERK, AND APPLIED DIGITAL?

Friedrich Vorwerk: "Underground" in the Best Possible Sense

Friedrich Vorwerk from Tostedt in Lower Saxony installs pipelines and infrastructure for electricity, gas, and hydrogen networks—a business model that sounds as unexciting in substance as it has at times been spectacularly re-rated on the stock market. Between mid-2023 and October 2025, the share price nearly increased tenfold, reaching up to EUR 105, driven by the so-called EUR 500 billion infrastructure special fund in Germany and an order backlog that most recently exceeded EUR 1 billion—more than the company's total annual revenue. The 2025 financial results impressively underscored this momentum. Revenue rose by 41% to EUR 704 million, operating profit (EBITDA) nearly doubled to EUR 163 million, and net income jumped by 140% to EUR 86.5 million. In addition to the regular dividend of EUR 0.70 per share, investors received a bonus payment of EUR 0.40 per share.

Since reaching an all-time high last fall, however, the share price has fallen by a good third to its current level of EUR 68.70. This weakness cannot be explained solely as a consolidation following the steep rise. There is a specific regulatory trigger. As part of its grid expansion, the German government is considering placing greater emphasis in the future on the significantly cheaper overhead lines rather than the more expensive underground cables. A company whose business model relies heavily on underground power line installations would be directly affected by such a legislative change. Added to this is an outlook that stock market investors apparently found too cautious: the Executive Board expects revenue to range from EUR 730 to 780 million in 2026. While this represents growth of between 4 and 11%, it marks a significant slowdown compared to the previous year's 41% increase. This development is a so-called base effect, typical of companies that have grown rapidly to valuations in the billions. The larger the revenue base, the more difficult it becomes to maintain past growth rates. Rapid growth also has its downsides. Not only does the administrative burden increase, but so do capital market expectations.

Noteworthy is management's reaction to the decline in the share price. CEO Torben Kleinfeldt, who has been with the company since 2001 and holds more than 18% of the shares, has purchased nearly EUR 2 million worth of the company's own shares through his ALX investment company since April. CFO Tim Hameister and the parent company MBB are also consistently buying shares during periods of weak market performance. This insider behaviour contradicts the market's skeptical assessment and suggests that management considers the regulatory uncertainty to be overblown. With an expected price-to-earnings (P/E) ratio of 13 for 2027 and a market capitalization of just under EUR 1.4 billion, the company, despite its subpar business model, is trading at a valuation level that leaves room for upside.

Almonty Industries: The Path to Becoming a Key Geopolitical Player

When a company surges by more than 2,000% within two years, it needs an extraordinary story to back it up. At Almonty Industries, that story is Sangdong. The South Korean tungsten mine, which had been shut down for over three decades, officially began operations in March 2026 after years of development work—at a time when the West is becoming increasingly aware of its dependence on Chinese raw materials. Starting in January 2027, new US defence guidelines will prohibit the use of tungsten from China and Russia in American defence supply chains—a regulatory window into which Almonty's start of production fits almost perfectly. The company is positioning itself accordingly as one of the few major Western suppliers of the world's most heat-resistant metal, which is indispensable for tools, semiconductor manufacturing, and, not least, armour and ammunition.

Operational progress has by no means remained merely a promise. Although the Sangdong mine only began operations shortly before the end of the quarter and is still far from producing at full capacity, revenue tripled in the first quarter to CAD 25.4 million, and operating cash flow turned decisively positive at CAD 9.7 million—following a deficit in the same quarter of the previous year. The reported net loss is almost entirely attributable to non-cash revaluation effects on derivatives and warrants, not to the company's operating business. Despite ramp-up costs this year, analysts are already expecting a net profit of CAD 239 million, which is projected to rise to CAD 607 million next year and could approach the CAD 1 billion mark as early as 2029. At the current share price of around CAD 23.50 (EUR 14.50 in Germany), the stock is valued at a P/E ratio of about 14 for 2027—which, contrary to what the speculative nature of the price movement might suggest, is almost outrageously cheap.

The pullback over the past few weeks, during which the stock temporarily lost more than a quarter of its value relative to its April high, cannot be attributed to operational disappointments. Rather, it was triggered by a convertible senior notes offering issued on June 4, which was increased from an initial USD 700 million to USD 800 million to finance the further expansion of the Sangdong project. The market reacted with the short-term dilution concerns typical of such capital measures, even though the company simultaneously entered into so-called capped calls—hedging instruments designed to limit the dilution effect should the senior notes be converted into shares at a later date. The share price, however, was supported by its inclusion in the US small-cap indices Russell 1000 and Russell 3000, which triggers automatic purchases by institutional index funds. The company, originally Canadian, has since relocated its headquarters to Dillon, Montana, making its inclusion in the two indices—given a market capitalization of more than USD 4.5 billion—merely a formality. The main goal of the move, however, was different: on one hand, the management team led by CEO Lewis Black wanted to underscore the company's importance as a raw materials supplier to the US armed forces; on the other hand, the geographical proximity to the Gentung Tungsten project, which is scheduled to begin operations in the second half of the year, was one of the decisive factors. The bottom line is that the current consolidation is a classic digestion phase following an extraordinary price rally—there is no sign of a fundamental breakdown.

Applied Digital: The Costly Bet on AI Infrastructure

While Almonty supplies a physical raw material and Friedrich Vorwerk lays underground cables, Applied Digital literally sells space and electricity—for the servers on which artificial intelligence is trained. In just a few years, the management team led by CEO and co-founder Wesley Cummins has transformed the former crypto-mining specialist Applied Blockchain into one of the most sought-after operators of so-called hyperscale data centers, whose facilities are tailored to the enormous power and cooling requirements of large AI computing workloads. The surge in the share price from around USD 6 in mid-2024 to over USD 37 today has catapulted the market capitalization to over USD 10 billion—more than double Almonty's valuation and seven times that of Friedrich Vorwerk.

Unlike the other two stocks in the trio, however, this valuation is not yet backed by profitability. There are several indications that this will remain the case in the medium term. In the third fiscal quarter of 2026, revenue grew 139% to USD 126.6 million, while the net loss widened to USD 100.9 million. According to consensus estimates, the company is not expected to turn a profit until fiscal year 2029. The P/E ratio of around 36, derived from the then-expected earnings of USD 1.05 per share, makes investing in the company at this point a bet on breaking even—a goal still years away. The expansion of the so-called AI Factory campus facilities, including the Polaris Forge site in North Dakota, is being financed through massive debt issuance. In March 2026, the company issued secured bonds totaling USD 2.15 billion at a coupon rate of approximately 6.75% to build capacity for its major customer, CoreWeave, and unnamed hyperscalers—that is, the largest cloud operators such as Microsoft, Amazon, or Google.

The risk factors are accordingly evident. A beta of 5.7 indicates volatility more than five times that of the overall market, likely due in part to Nvidia's complete exit from its stake in the fourth quarter of 2025. This event has since resulted in significant share price losses. A key factor for future performance will be whether the contractually guaranteed lease revenue from the completed data center capacity begins to flow quickly enough to offset the growing interest burden. Analyst firms such as Roth MKM justify their positive assessments by pointing to a theoretical operating profit of approximately USD 1 billion at full capacity utilization of the contracted facilities—a scenario that, of course, remains to be seen.

Three Stories of Rapid Growth, One Key Insight

Energy infrastructure in northern Germany, tungsten mining in South Korea, data centers for artificial intelligence in North Dakota—three companies, three industries, three completely different stories. And that is precisely where the real insight lies for investors: a multiplication of market capitalization initially says nothing about the foundation on which it rests. Friedrich Vorwerk shows that even a company that has long been profitable and is moderately valued can react sensitively to regulatory changes, even if its operating figures remain impressive. Almonty demonstrates how quickly the market can swing back and forth between euphoric revaluation and sober concerns about dilution, even if the valuation level achieved is fundamentally justified. Finally, Applied Digital shows the other side of the coin: a valuation based almost entirely on future business, financed by a debt burden that has become the norm in the AI infrastructure boom.

For investors, this presents a challenge in distinguishing between the options. Those looking to invest in mature, fundamentally sound stocks will find what they are looking for in Friedrich Vorwerk and Almonty—with the difference that, in one case, politics has become a stumbling block, while in the other, it provides a tailwind. Those, on the other hand, who are focused on maximizing the leverage of the AI infrastructure boom will turn to Applied Digital—but in doing so, they will also face the highest valuation, the thinnest fundamental cushion, and the greatest risk of a setback among the three stocks.