05. May 2021 | 09:10 CET
Varta, BYD, SunMirror: Short-term prospects in check
Shares related to electromobility and hydrogen have been the yield drivers in recent months. But why are stocks like Varta and BYD weakening now? After the enormous price increases, speculators are pulling back. But this is not necessarily a bad signal. Stocks showing relative strength in the current phase could be at the forefront of the subsequent rise. We outline three exciting investment stories.
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ISIN: DE000A0TGJ55 , CNE100000296 , CH0396131929
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Varta: Will this be a German success story?
German battery manufacturer Varta has been considered a secret electromobility winner for several months. The reason: the Company is well-positioned in all aspects of rechargeable batteries and only needs to make the switch to e-car batteries. But the "only" thing is causing heated discussions. The extent to which it is enough to transfer known know-how to a new area and whether Varta can manage to hold its own against the Chinese competition remains an open question.
2020 was a record year for Varta. Figures for the first quarter of 2021 are to follow on May 12. Varta itself wants to remain on the growth path. But to what extent the market is satisfied with this growth remains uncertain. However, a good sign for investors is that the share has already lost some value in recent months. That reduces the potential drop. However, from a chart perspective, the prices should remain in triple digits; otherwise, there could be further selling pressure on Varta.
BYD: Under pressure in the short term, opportunities in the long term
The BYD share is also under selling pressure - it has fallen by around 40% in the last three months. There is still a gain of almost 200% on a one-year horizon, but the stock recently broke a chart support zone. If the share does not recover immediately, there is also short-term downward potential to EUR 15. Nevertheless, BYD appears well-positioned. By its own account, China's largest car manufacturer is a leader in battery technology. BYD wants to increase the supply of batteries to other manufacturers in the future and thus further fuel the price war. BYD considers itself well-positioned, as it has always covered large parts of the value chain around e-cars.
Another advantage for the Chinese is their access to raw materials: Lithium, cobalt, rare earths and copper are urgently needed for electromobility. China has been pursuing an active raw materials policy for decades and is positioning itself aggressively in many countries. In addition to numerous investments in South America and Africa, the mammoth New Silk Road project proves China's strong geostrategic position.
SunMirror: Broad portfolio around e-metals and gold
An alternative to commodities from China or its sphere of influence is what the Swiss Company SunMirror wants to be. SunMirror operates three commodity projects in Australia and focuses on gold in addition to lithium, tin, nickel and iron ore. Only recently, the analysts of Sphene Capital attested the share further potential up to a level of EUR 174.30. Currently, one share is valued at EUR 144. While many stocks around electromobility weakened in recent months, the share of the Swiss increased by 18%.
Analysts at Sphene Capital believe it is possible that the promising Cape Lambert South, which contains iron ore, will be sold to an investor. As a result, this could allow SunMirror to focus more on metals around electromobility or put possible funds into new plans. The Swiss Company's stock has been rising slowly and steadily for months. Investors should consistently monitor the development of SunMirror as their projects are attractive and exude imagination. SunMirror is currently valued at around EUR 290 million and is thus no longer a small company.
Raw materials as a prerequisite for the e-car boom
Investments in electromobility have a promising future - but they are also speculative. Especially in the area of battery production, a price war could ruin many ambitious plans. The Chinese Company BYD is in a better position, even though the share seems expensive on the one hand and market-relatedly battered on the other. Commodity companies such as SunMirror are less exciting than BYD, but they are a prerequisite for the e-car boom. Companies on a growth course can therefore be promising.