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May 15th, 2024 | 06:45 CEST

Volkswagen, Desert Gold, RWE - There is significant upside potential here

  • Mining
  • Gold
  • Electromobility
  • Energy
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The search for stocks with upside potential is like a treasure hunt in the depths of the financial markets. It combines analysis and intuition to find companies with solid fundamentals, innovation, and a good market environment for growth. Investors must show foresight and recognize many factors that make a share special. We have selected three candidates who have not stood out in recent months but still have significant catch-up potential.

time to read: 5 minutes | Author: Armin Schulz
ISIN: VOLKSWAGEN AG VZO O.N. | DE0007664039 , DESERT GOLD VENTURES | CA25039N4084 , RWE AG INH O.N. | DE0007037129

Table of contents:

    Bill Guy, Chairman, Theta Gold Mines Limited
    "[...] 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

    Full interview


    Volkswagen - Not as bad as it seems

    The Volkswagen Group is in a transformation phase. Even if the electric cars are not going down so well in China at the moment and the margin still has room for improvement, a number of points still speak in favor of an investment. The fact is that the figures for the first quarter cannot be satisfactory. At EUR 75.5 billion, sales revenue was around EUR 700 million, down on the previous year. The operating result fell by around 20% to EUR 4.6 billion. However, the order backlog remains stable compared to the end of 2023, and the management also expects the Company to meet its forecasts for the financial year.

    One of the cornerstones of Volkswagen's financial stability is its low debt and high cash position. This position allows the Company to maintain a healthy capital structure while retaining the scope for targeted investments that can be crucial to the Company's growth and further development. Volkswagen's consideration of selling shares in its Traton division demonstrates its willingness to actively manage shareholder value to further improve its financial position.

    A company that is profitable despite some problems should be on one's watch list. Even if there are said to be problems in China, sales there rose by 2% compared to the previous year. In Europe, sales fell by 5% and in North America by as much as 10%. Customers here may currently be waiting to see if there will be subsidies again. Analysts are largely positive about the share. Since April 30, there has only been one "Sell" recommendation, 2 analysts have recommended "Holding", and 5 have recommended "Buying" with price targets between EUR 140 and EUR 180. The share is currently available for EUR 120.70. A decision on the dividend will be made at the Annual General Meeting on May 29.

    Desert Gold - New drilling program started

    Desert Gold is a promising exploration company focusing on the exploration and development of gold deposits in West Africa. With a land package of 440 sq km along the Senegal-Mali Shear Zone, the Company has a strategic presence in an area associated with several successful gold mines. This is giving rise to latent takeover fantasies. After the gold price recently rose significantly, the share also benefited in the short term, but then fell again due to the consolidating gold price and rumors about the Malian government, which would have been detrimental to the mining companies. The CEO of B2Gold recently took a firm stance against the rumors and described the reports about Mali as irresponsible journalism.

    On May 14, Desert Gold announced the start of the second phase of its extensive exploration program on the SMSZ project area in Mali. The program, which includes a total of 3,750 m of drilling, aims to expand existing gold deposits while exploring new exploration targets. According to CEO Jared Scharf, the Company intends to significantly increase the resource base through this detailed and strategically planned program. This will contribute to the project's ongoing development and could lead to the definition of new oxide gold resources or new gold zones.

    To fund exploration activities, the Company announced a non-brokered private placement on April 23. The new shares will be placed at CAD 0.07 and have a warrant at CAD 0.08. The financing, which is above the current share price of CAD 0.06, will be used primarily to conduct additional RC and aircore drilling on key deposits and four neighboring exploration targets. Now that the Mali rumors have been cleared up, one could take advantage of the exaggeration to the downside before the Company implements its gold production plans. At the current market capitalization, an ounce of gold is valued at less than CAD 11.

    RWE - Ahead of the quarterly figures

    RWE, one of Europe's leading energy companies, is pressing ahead with its green transformation. As part of its ambitious "Growing Green" program, RWE invested an impressive EUR 11.4 billion in 2023 alone, more than double the amount invested in the previous year. These investments are being used to expand renewable energies and reduce CO2 emissions - a commitment that is already bearing fruit. The Company has been able to significantly reduce the CO2 emissions of its power plant fleet and, at the same time, increase the production of green electricity by 27%.

    This development is also reflected in the solid financial performance: RWE exceeded both its adjusted EBITDA and adjusted net income in 2023. The course has been set for the future. RWE is planning massive investments of up to EUR 55 billion by 2030 in renewable energies, storage technologies, and hydrogen projects. The aim is to expand the green portfolio to over 65 gigawatts. Particularly noteworthy is the strategic entry into the US market with the successful issue of a green bond with a volume of USD 2 billion. RWE is thus underlining not only its financial strength but also its ambition to play a key role in the global energy transition.

    RWE is positioning itself as an attractive investment in the field of renewable energies. The "Growing Green" strategy secures long-term growth and sets the course for a sustainable future. Despite the expected challenges for 2024, such as lower electricity prices, RWE is sticking to its forecast and plans to increase the dividend to EUR 1.10 per share. The figures for the first quarter will be presented today, May 15. As an investor, this may provide an insight into the future. The share has recently moved away from its low of around EUR 30 and is trading at EUR 34.93.

    All three companies are trading far from their highs. All three could have experienced downward exaggerations, which can now be used to enter the market. Volkswagen has shown with its quarterly figures that it is still earning good money despite the problems. The shares of Desert Gold have lost considerably more of their last high than the gold price. This is due to rumors surrounding the Malian government. With the drilling program, fresh news is on the horizon. RWE presents its quarterly figures today. The investments in the future will pay off in the long term.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author

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