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November 13th, 2020 | 13:13 CET

Varta, Royal Helium, Deutsche Telekom - Buy the future!

  • Investments
Photo credits: pixabay.com

When it comes to the DAX, the first thing to do is to take a breather. After the brilliant Biden-BioNTech rally, the leading German index started to move south. And today, not only did companies listed on the DAX release encouraging quarterly figures but companies like Merck and Siemens, Deutsche Telekom, in particular, raised its forecast. Also, in the segments below, there were spectacular figures. After the setback in the markets, there are some buying opportunities here.

time to read: 3 minutes | Author: Stefan Feulner
ISIN: CA78029U2056 , DE000A0TGJ55 , DE0005557508

Table of contents:


    Magenta shines

    Following the report on the Q3 figures, the Bonn Company shone with a forecast increase. The marriage of the US subsidiary T-Mobile US to its smaller competitor Sprint proved to be an absolute stroke of luck.

    "We are raising our forecast thanks to good business on both sides of the Atlantic," said Deutsche Telekom CEO Tim Höttges on Thursday when presenting the quarterly figures. Europe's largest telecoms group now expects adjusted operating profit, excluding lease expenses, of at least EUR 35 billion in 2020 instead of the previous figure of around EUR 34 billion. "I don't know if I will ever see this again," said Höttges, referring to the EUR 1 billion increase.

    Rising demand

    Besides hydrogen, helium is the most abundant element in the universe. Hydrogen is booming at the moment. The applications for helium are also extensive and, at least, as essential. There has been a substantial increase in demand in recent years in the health care sector and in manufacturing. Also, the topic of space travel is becoming increasingly important. NASA is already the largest single customer for helium dealers. When launching rockets, helium is required for the pressure regulation of the fuel tanks.

    Few suppliers

    There are only a handful of pure helium companies on the stock market, which allow investors to participate in the future development of the commodity. The Canadian Company Royal Helium focuses on the procurement of this noble gas. The gas cannot be produced artificially, and it is usually extracted from underground deposits. Royal Helium has access to around 400,000 hectares of licenses for the noble gas in North America, making it one of the largest market players. The Company recently announced that it has received helium permits for an additional 32,166 hectares in the southeast half of Royal's property in Saskatchewan, Canada, where the total area of helium leases and approved concessions now totals approximately 4,320 square kilometers.

    Strong forecasts

    The Canadian analyst firm Cormark Securities Inc. highlights the advantages and enormous opportunities of Royal Helium. The expert Michael Mueller, therefore, gives a buy rating with a target price of USD 0.80 as an initial assessment. The current price is USD 0.29, a difference of more than 100%.

    Great numbers, as expected

    Varta was able to increase its sales of the first nine months to EUR 630.3 million. This means a plus of almost 160% compared to the same period of the previous year. Without the acquisition of Consumer Batteries, it would still be an increase of nearly 70%. The Ellwangen-based Company was also able to shine with a definite plus of 180% in the operating result for the first nine months, which now amounts to EUR 176.8 million.

    Forecast increase logical

    Herbert Schein, the CEO of Varta, continues to assume that the boom in wireless headphones will continue. "The trend among cell phone manufacturers is clear: cable is a thing of the past," Schein said on Thursday. "Soon, the only interface to the devices will be wireless." Accordingly, the annual forecast has been raised from EUR 840 million to EUR 860 million. Previously, the Company had only assumed sales of up to a maximum of EUR 830 million. Earnings before interest, taxes, depreciation and amortization adjusted for special effects should reach EUR 230 million to EUR 235 million, after EUR 97.5 million in the previous year. Here, management assumed only EUR 215 million.

    Faster, faster and faster

    Already in 2021, the magic threshold of EUR 1.0 billion turnover should fall. There is a primary goal for the M-DAX-listed Company in the near future. The production speed is to be increased by 50% next year, making it even more efficient. Varta plans to increase production capacity to 300 million batteries per year by the end of 2021.

    Share price goes down

    Although the figures were very well received, the forecasts were criticized as too conservative. Various analyst firms were of different opinions. After the figures, the experts at Warburg renewed their sell recommendation for the Varta share. The experts see the price target at EUR 80.00. The reason for the sell recommendation is the increased competition, as Samsung, for example, also wants to become active in the battery sector. In contrast, Berenberg is sticking to its buy recommendation with the target price raised from EUR 140.00 to EUR 145.00. In any case, according to the figures, the share price fell to EUR 116.00, a drop of almost 5%.


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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



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