08. March 2021 | 09:00 CET
TUI, Desert Gold, Barrick Gold: Investing solidly in the future
Rarely have Bild and Spiegel been in such agreement: the German government has failed in the pandemic. Meanwhile, there are even calls for resignations. But despite the stuttering start to vaccinations and the lack of rapid tests, one thing is sure: the pandemic will reach its end in the medium term, and with this, economists expect a boost for the economy. Which stocks will benefit most and where can investors already get a foot in the door today?
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ISIN: DE000TUAG000 , CA25039N4084 , CA0679011084
"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
TUI and the advanced praise
The TUI share is one of the potential winners of an opening - after all, Germans have itchy feet after the permanent lockdown and finally want to enjoy their vacations in freedom. But share prices have already anticipated some of these expectations. The Stoxx Europe Travel & Leisure sector index has risen by more than 15% since the turn of the year. The TUI share has also benefited and is considered a hot commodity, especially by many German private investors. But how do financial professionals view the share?
The industry service Bloomberg lists all analysts and their opinions on TUI: Of 22 analysts, a full 15 rate the stock a "sell." Although analysts are often cautious with turnaround stories and do not lean too far out of the window, optimism looks different. Although bankruptcy is off the table following the state's entry into TUI, it cannot be ruled out that shareholders will have to bleed in return. The share is currently on an upward trend - but this trend is by no means set in stone.
Desert Gold: The time is right
Despite the setbacks, the upward trend in gold remains intact. The precious metal is in a long-term upward movement but has been consolidating for months. Many promising companies in the gold sector are therefore trading near their historical lows. One example is Desert Gold. The Company is exploring a 410 km² land package in Mali in the Senegal-Mali Shear zone. In total, there are more than twenty gold zones on the property, which are also surrounded by producing mines. In the past, Desert Gold convinced with partly brilliant drill results and brought to light, among others, gold grades of 6.3g over 13 meters.
In 2021, Desert Gold plans to drill 20,000 meters again and already has the necessary funds in its coffers. The share has been trading between 10 and 11 cents in Germany for weeks and has found a bottom in this area. As recently as August 2020, the gold share was trading beyond the 20 cent mark. Shortly after that, Desert Gold raised new capital. Those with a long-term view can take a very close look at the stock at this point. While the markets are currently challenging the US Federal Reserve by pushing up bond yields and pricing higher interest rates, the monetary guardians could soon feel compelled to strike a liberating blow that could involve strong words or even intervention. The time for gold has not yet come. Investors with foresight should position themselves in good time.
Barrick Gold as a second-best alternative
Barrick Gold currently also offers a similar comeback opportunity - albeit in the field of rather dull blue chips. The world's largest gold Company is suffering from the price decline. This is a little surprising because Barrick had generated rich surpluses quarter after quarter in 2020 and did not know what to do with the money. In the end, a special dividend was supposed to make the shareholders happy. But the joy lasted only a short time. Investors pocketed the money and turned their backs on the stock - which has lost around 15% since December. It just goes to show that investors can incur losses even with seemingly defensive stocks.
Investors who believe in a rising gold price can still make a note of Barrick Gold. The value should profit from a gold price comeback. However, the share price sale over the past five years shows that Barrick's trees are not growing to the sky: a return of just under 30% is hardly convincing for any investor. Also, the Barrick Gold share has not yet found a bottom. In contrast, Desert Gold offers a more attractive risk-reward ratio. The small value trades stable around 10 cents and is fully financed. If the gold price picks up again, it should go up dynamically here. These conditions allow even cautious investors to add value to a portfolio with an adjusted position size. The property is promising and the Company is financed. Those who expect higher gold prices at the end of 2021 can buy Desert Gold today.