TUI, Desert Gold, Rheinmetall - Is the next upward wave coming?

TUI AG - Downward spiral stopped

At the low for the year of EUR 5.22, the TUI share even traded below the level of the last major capital measure at EUR 5.55, which brought the highly indebted travel group around EUR 1.8 billion in gross proceeds. With the confirmation of the positive business performance and the annual forecast, the downward wave seems to have stopped, at least in the short term. The next target would be the downward trend established since January 2023, currently at EUR 6.56. Whether this level can be sustainably broken and whether the year 2024 will also lead to record bookings due to the current loss of purchasing power and the consumer restraint of German citizens is, at the very least, a matter of doubt.

Although the Hanover-based company's summer bookings were still 4% behind pre-Corona levels compared to last year, TUI reported a 5% increase. However, profit forecasts of EUR 409 million in adjusted EBIT for the fiscal year ending September are expected to be significantly exceeded. In addition to rising booking numbers, increased prices also ensured above-average results. Compared to summer 2022, TUI customers spent an average of 8% more, but compared to 2019, their wallets were opened 27% less.

"The positive booking momentum continues, and I am very optimistic for the upcoming winter and summer season", said CEO Ebel. He said the 2023/24 winter program is still in an early booking phase, but bookings are already 15% higher than a year ago.

Desert Gold Ventures - Best positioned

The gold price has also risen in recent days. After another correction wave, the yellow metal once again successfully tested the psychologically important mark of USD 1,900 per troy ounce but then turned upwards and overcame the short-term downward trend formed since May 2023 and the rising 200-day line. The next resistance is at USD 1,951. Should the FED pause interest rates in today's decision and comment on ending the tight monetary policy, the gold price could target the USD 2,000 mark in the long term.

A sustained rise in the base price would be a boon for gold mining stocks, which have been badly battered in recent years. In particular, smaller exploration companies such as Desert Gold Ventures, prospecting for gold in Mali, lost disproportionately. While one share still cost CAD 0.30 in August 2020, now one can buy a Desert share for CAD 0.045. The current market capitalization is close to the CAD 10 million mark.

If you look at the position of the 440 sq km SMSZ project, which is one of the largest undeveloped areas in West Africa and is located in the eponymous Senegal-Mali shear zone, the enormous potential becomes apparent. There are already active mines in the immediate vicinity by companies such as Barrick Gold, Endeavour Mining and B2Gold. Allied Gold's Sadioka mine is located right next to the area that Desert Gold Ventures is exploring.

Over 23 gold zones have been identified in the immediate area to date, which continue to be explored and evaluated for economic viability. As early as February 2023, Canada-based Desert Gold has completed 445 drill holes totaling 2,067 m. Currently, the Company is planning an extensive drilling program of approximately 30,000 m. Following this, a revised resource estimate is planned. Current estimates indicate Indicated Mineral Resources of 310,300 ounces and Inferred Mineral Resources of 769,200 ounces of gold.

Rheinmetall on fire

Weeks ago, the situation of the Rheinmetall share chart looked critical. A fall below the EUR 232.80 mark would have given the share price further downside potential. But once again, the Düsseldorfers were able to turn the tide. At EUR 262, the share price is currently only slightly below the short-term downward trend at EUR 269.60 established since April. Overcoming this would mean a direct path to the all-time high of EUR 273.

The analysts of the private bank Berenberg trust the share to reach a level of EUR 300. The vote is "Buy". According to the analysts, the defense budgets of the countries have increased since the start of the Ukraine war. As a result, defence companies should experience an annual increase in their revenues of 5%; at Rheinmetall, this should be even higher due to the shorter-term business cycles.

The share price is also receiving a tailwind from a consistently positive news flow. For example, Lufthansa AG announced its intention to participate in a joint project with the defense company Rheinmetall for the production and maintenance of components for the Lockheed F-35 fighter aircraft. This step marks a strategic reorientation for the aviation group, as Carsten Spohr, Chairman of Lufthansa's Executive Board and CEO, emphasized in Frankfurt on Thursday evening. In times when military conflicts are on the rise, the need for technological expertise to optimize the defense capabilities of global armed forces is increasing. Spohr also expressed Lufthansa's interest in participating in a major helicopter project that the German armed forces are currently discussing with Boeing for a heavy transport helicopter.

The FED decision in the evening casts its shadow ahead. In the event of an interest rate pause, gold stocks such as Desert Gold Ventures are likely to benefit. TUI, in turn, has benefited from rising booking numbers and price increases and the defense group Rheinmetall from growing defense budgets of the states.