September 28th, 2022 | 11:22 CEST
Time for bargain hunters? Plug Power, Varta and Pathfinder Ventures
Table of contents:
"[...] In addition to campsite fees, Pathfinder Ventures has put itself in a position to offer all of these sought-after camping solutions. The only thing they don't sell is the RV itself. [...]" Joe Bleackley, CEO, Pathfinder Ventures Inc.
Pathfinder Ventures: An exotic company with price potential
What stockbroker doesn't want to discover a growth story before the masses do? One candidate for that is Pathfinder Ventures. The Company is currently building a network of upscale, family-friendly campgrounds and RV parks in western Canada. In doing so, it is capitalizing on the trend toward self-directed vacations in the great outdoors. Pathfinder is only at the beginning of its growth and investment phase. Still, the operating result is already profitable at this early stage - especially important in the environment of rising interest rates. There is plenty of growth potential for the coming years. The camping market in Canada alone is worth CAD 2.3 billion - and expansion into the US should not be a major problem.
In the second quarter of 2022, Pathfinder Ventures increased revenue 81% YOY to about CAD 917,000. Despite high investments, operating earnings before interest, taxes, depreciation and amortization (EBITDA) were significantly improved from CAD -398,120 to CAD 54,395. The net loss was also reduced. Currently, Pathfinder Ventures operates three sites. The Agassiz site was acquired in the second quarter of 2022 and is already being expanded. In addition, the Company plans three more acquisitions through 2023 - one of which may occur this year. At the end of the second quarter, the Company had cash on hand of CAD 1.58 million. In the current year, revenue is expected to increase to CAD 3.1 million. With a market capitalization of around CAD 4 million, Pathfinder is a microcap, but is anything but expensive.
Plug Power: Hydrogen from offshore wind power
Germany is not the only country with high hopes for hydrogen as a substitute for natural gas. The technology of the future is also being promoted worldwide. This is necessary because the technology is not yet ready for mass production. But what can be in the future is shown once again by Plug Power. The hydrogen pure play, together with partner Lhyfe, has commissioned the first hydrogen production plant on a floating platform. Why on the sea? Because it allows the 1 MW plant to be in the immediate vicinity of an offshore wind farm and produce green hydrogen. The plant was built off the French Atlantic coast and serves as a test for further projects by Plug Power and Lhyfe. The two partners plan to jointly build green hydrogen production facilities across Europe. Production capacity is expected to reach 300 MW as early as 2025. They also plan to develop a 1-GW production facility jointly. Plug Power's stock has not been able to benefit from the news. It has corrected significantly in recent days and is currently trading at around EUR 23. According to marketbeat.com, Plug Power is recommended as a buy by 12 analysts, while 7 advise a hold. There is currently no sell recommendation. The average price target is USD 34.24.
Varta: Has the time come for bargain hunters?
After the crash of the Varta share, has the time come for bargain hunters? At least the analysts of Warburg seem to be of this opinion. Thus, they have upgraded the share of the battery specialist from "Sell" to "Buy". The price target is EUR 53. However, the reasoning seems a bit thin: Although no positive newsflow is expected, for the time being, negative developments should now be priced in. A growth story looks different. DZ Bank also sees it that way. "The renewed failure to meet the targets the Company has set itself is likely to weigh on the share price in the short and medium term," said the analysts. They added that the medium-term sales target of EUR 1.3 billion to EUR 1.4 billion in 2024 is also unlikely to be achieved. The business with large-format batteries for electric cars will only contribute to sales from the end of 2024. With a target price of EUR 40, the analysts see little upside potential. The share certificates are currently trading at 35%. Thus, even the presentation of Bernard Wolf, Head of Investor Relations of Varta, at yesterday's 4th IIF investor conference (https://ii-forum.com/speaker/bernhard-wolf-head-of-ir-varta-ag/) could not provide new hope. The fact that Varta has revised its previous forecasts but has not published any new target figures is likely to cause uncertainty among investors. It leaves plenty of room for speculation, and stock market players do not like this.
Even if the current price level appears attractive for bargain hunters, the growth fantasy is out of Varta for the time being. Plug Power is one of the leading companies in the hydrogen sector, but it needs more than just 1 MW plants to justify the high valuation. The valuation at Pathfinder Ventures is anything but high, but if the Company delivers on its growth targets, it could be worthwhile for investors.
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