27. November 2020 | 10:24 CET
Varta, Royal Helium, NEL ASA: After the hype is before the hype
The world is facing a whole series of revolutions. Digitalization is changing business models and the way we work and communicate. New energy sources are revolutionizing mobility. Between April and October, Varta's stock posted an impressive performance and generated a return of more than 150%. Recently, however, the share price has come down a little again. Reason enough to put the Company through its paces a little. Varta manufactures micro-batteries, such as those used in hearing aids or other household appliances. By the end of next year, Varta intends to expand its capacities in this area. The Company is also taking a step forward in terms of quality and plans to increase energy density further, and this is how the Company intends to stand out from the cheap competition.
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ISIN: NO0010081235 , CA78029U2056 , DE000A0TGJ55
Varta: Is history repeating itself?
In recent months, the share has been celebrated by investors, particularly for its fantasy about entering the field of electromobility. Thanks to public funding of EUR 300 million, Varta could gain access to a lucrative market. Coupled with the positive forecasts in the core business with batteries for hearing aids or headphones, this price fantasy has boosted the share.
However, the management could no longer convince analysts and the first observers expressed doubts about the equity story. The competition from Asia should also be mentioned in this context: It would not be the first time that German companies in a technology of the future are ultimately at a disadvantage compared to China, despite generous subsidies - the situation was similar years ago with photovoltaic stocks. The Varta share is, rightly, currently undergoing a consolidation. The music is out for now.
Royal Helium: Revaluation still in December?
The share of Royal Helium went into reverse in the past months. The Canadian second-tier stock is looking for the noble gas helium in the south of the Canadian province of Saskatchewan. The gas has unique properties and can be used in many areas: the largest area of application is in medical technology, where it is found in MRI equipment. The noble gas can also be used in the manufacture of computer chips and in the quality testing of batteries. Helium can thus do much more than making balloons rise. The analysts at Cormark Securities also see it that way and expect a shortage of helium in the coming years.
Royal Helium wants to take advantage of this and further advance its Canadian helium project. With 400,000 hectares of land and surrounded by crucial infrastructure, the property is considered promising. Royal Helium is currently conducting a technical investigation to evaluate the economics of a gas processing plant. The Company points out that the property may also have the potential to market by-products in the form of other gases. The Company plans to present the first results of the study in December. Royal Helium's shares may have attractive prospects due to the many uses of helium in the medical, semiconductor and battery sectors.
NEL ASA: Hydrogen hope at a crossroads
NEL's share certificates are also full of promise. The Norwegian hydrogen specialist takes care of the production of hydrogen, its storage and distribution. Thus, NEL covers all aspects of hydrogen. If you imagine a future full of hydrogen cars, you can hardly avoid solutions from the Norwegians. Hydrogen as an energy carrier is regarded as a clean alternative to lithium-ion batteries, as these are dependent on numerous critical metals, the promotion of which causes environmental damage.
Despite the rosy outlook and the catchy investment story, the NEL share has recently hit its head several times in the range of just over two euros. This zone of resistance has proven to be stubborn. According to the technical chart, the stock is now in a decision zone: If a sustained breakout above this resistance zone is achieved, further price momentum may emerge, and if the breakout is not successful, price losses are possible. Since NEL is already ambitiously valued, a correction cannot be ruled out.
The most significant opportunities are lurking among latecomers
Varta is a latecomer into the field of e-mobility but has already made significant gains. NEL, on the other hand, is a pioneer and well-positioned around hydrogen. The current hydrogen hype could lead to the market allowing even higher valuations. Nevertheless, investors should be aware of the high fall. Even if intact trends offer a good investment environment, it is also worth taking a look at the second tier. Helium-related stocks are also benefiting from a whole range of megatrends and are currently in low demand, allowing speculative-oriented investors to enter the market at favourable prices.