15. June 2021 | 11:22 CET
Varta, BYD, NSJ Gold: What investors should watch out for
The die is cast: Cars will go electric in the future. A clear course has also emerged in monetary policy in recent years: Central banks tolerate more inflation and stimulate the economy. Governments are also in a spending mood: infrastructure, state aid, investments for the future - at the latest since the outbreak of the pandemic, the powers that be have been governing according to the principle of "What is the cost of the world?" We present three shares that can profit.
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ISIN: DE000A0TGJ55 , CNE100000296 , CA62973P1071
"[...] 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
Varta: Q-Cells and SolarWorld as cautionary examples
The more states steer the economy with subsidy programs and investment aid, the more likely opportunities arise on the market, even for companies that are not competitive. More than ten years ago, this was the case in Germany with solar companies. Thanks to subsidies, an industry emerged that flourished despite competition from the Far East - at least until the contributions diminished. Skeptics predict a similar scenario for the German battery industry. With German automakers, such as VW, already announcing plans to invest heavily in the supply chains surrounding electromobility, e-car fantasy also developed around German companies in the battery industry. One of these companies is Varta.
Currently, Varta produces button cells and other batteries that are characterized by good quality and longevity. By the end of the year, test production for batteries for electric cars should be up and running. Then Varta wants to enter the big future topic of electromobility in a big way. Although the Company has a great deal of expertise in the field of rechargeable batteries and batteries, electromobility is new territory for Varta. While the competition from Asia has long had its own experience with e-car batteries, Varta is a latecomer to the market. The initial euphoria surrounding the share has already faded. The Company must first show what it can do and then name customers and sales figures. Until then, the story around the share is exciting but also vague.
BYD: There is only one catch here
The situation is more straightforward for BYD. The e-car manufacturer from China started as a battery manufacturer and is now a fully integrated industrial company: Its e-cars, powered by BYD batteries and its semiconductor chips, make many manufacturers from Europe green with envy. What VW is only planning, BYD has already implemented. Supply chains are no longer a challenge for the Chinese. The market has recognized that this setup is promising. In the past month, it has boosted the stock by a whopping 50%. If it manages to jump above the EUR 23.70 mark in Germany, the all-time high is in its sights. The Company and the share are expensive but also well positioned. Only BYD's brand image does not shine as brightly as many a German premium manufacturer.
NSJ Gold: EUR 4 million market capitalization around gold and copper
Companies like NSJ Gold do not have to worry much about their image - anyone who mines raw materials used in electric cars or stored in a vault as an investment stands for a fungible commodity whose origin is largely irrelevant on the market. Only ESG criteria, i.e. the question of sustainability, is gaining in importance around raw materials for e-cars. Here, NSJ Gold, which operates in North America, can score with high environmental standards. Both raw materials are found in high grades at the Golden Hills copper and gold project in the US state of Arizona. Just two weeks ago, NSJ Gold announced the completion of a drill program of 16 holes covering 1,263 meters. In the process, the Company encountered high-grade gold occurrences over a distance of at least 88 meters. Yesterday, the Company released results from the first nine holes. These included 7.93 g/t gold and 1.61% copper over a distance of 4.57 meters.
With the stock currently valued at only around EUR 4 million and comparable deposits at an advanced level being valued much more ambitiously, NSJ Gold's stock could be a promising opportunity. In the coming weeks, the remaining drill sample results from the laboratory are expected. These could provide further clues to Golden Hills' potential. With the global e-car boom and growing interest in gold, investors may want to bookmark the stock. Since the stock has a very low market capitalization and potential deposits are only slightly priced, the stock can leverage commodity prices.
Competition and valuation decides
Similar to Varta, NSJ Gold is trading the future. However, the mix is much less complex: If high grades of gold and copper are found, the Company will continue, and the share price should continue to rise, subject to further good results. NSJ does not have to worry about the competition at the moment. The situation is different for Varta. The Company has yet to prove that it can compete with the Asians in the market for e-car batteries. Companies like BYD already have a strong market position here, but they are also costly.