December 27th, 2024 | 07:10 CET
Volkswagen, Globex Mining, Novo Nordisk – Here are the opportunities for the coming year
The vbw commodity price index recorded a remarkable increase of 4.4% in October 2024 compared to the previous month – an increase of 18.4% year-on-year. On the one hand, this is surprising, as the economy has reportedly noticeably slowed down. On the other hand, geopolitical tensions seem to be causing overcompensation. Raw materials are the engine of the economy, and it is not for nothing that the price of copper is considered a leading indicator of economic activity. In times of export restrictions, it is clear how dependent the world is on China and Russia. Without the crucial raw materials, production comes to a halt. We take a look at three companies and assess whether they are well-positioned in the raw materials sector for the upcoming year.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
VOLKSWAGEN AG VZO O.N. | DE0007664039 , GLOBEX MINING ENTPRS INC. | CA3799005093 , NOVO NORDISK A/S | DK0062498333
Table of contents:
"[...] As we look at four or more zones in more detail from the beginning, investors can expect a continuous news flow that will underscore our vision of the Holy Grail project as a giant opportunity. [...]" Nick Luksha, President, Prospect Ridge Resources
Author
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.
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Volkswagen – Building a battery ecosystem
Volkswagen had a number of problems to contend with in 2024. These included high production costs in Germany, issues with the switch to e-mobility, and a loss of market share in one of the most important markets for carmakers, the Chinese market. However, even in Europe, sales figures are declining. The reasons for this are consumer reluctance, poor vehicle software, and an infrastructure for electric mobility that is growing but still not sufficiently available and is also expensive due to high electricity costs, especially in Germany.
Despite the issues, the Company is sticking to electric mobility. It is securing access to 100,000 tons of spodumene concentrate per year for the next 10 years with a strategic investment of USD 48 million in Patriot Battery Metals. This ensures the lithium supply for the battery factories of Volkswagen subsidiary PowerCo in North America and Europe. The Wolfsburg-based company is also investing in battery development. To this end, it has signed a licence agreement with QuantumScape, which aims to bring a battery to series maturity that offers higher energy density, faster charging times, and greater safety. These solid-state batteries are expected to have a total capacity of 40 gigawatts (GW) per year, which can be expanded to 80 GW.
If Volkswagen succeeds in building a global battery ecosystem and getting a grip on the software problems of electric vehicles, then the stock could finally start to rebound. The Company is now implementing an austerity program and attempting to complete its transformation toward electric mobility. In order to save costs, a total of 35,000 jobs are to be cut by 2030, and production capacity will be reduced by 700,000 vehicles. This has prevented plant closures for the time being. The share is currently trading at EUR 87.04.
Globex Mining – More than 250 raw materials projects
Anyone looking to invest in raw materials should be aware of Globex Mining. The Company pursues a clever approach that turns the classic rules of mining on its head. As a kind of "mineral bank", the Company employs an interesting project development model: buy property, upgrade it, and leave the risky development to others. Instead of operating high-cost mines, Globex earns through royalties, partnerships, and options. With over 250 projects in Canada and the United States, ranging from gold to industrial minerals, the portfolio is impressively diversified. With no debt and solid liquidity, Globex is able to manoeuvre safely through volatile commodity markets – a modern strategy for success in mining.
In December, the Company published numerous drill results from the Ironwood gold project in Cadillac Township, Quebec. The previous drill results showed high-grade gold mineralization in a sulphide replacement zone associated with an iron oxide formation, ranging from shallow depths to approximately 225 m below ground level. Historical data has outlined an estimated resource base of 243,200 tons grading 17.26 g/t gold. The objective of the current drilling program is to refine the resource by infill drilling and to define the outer limits of the deposit. Wide high-grade intervals, including 23.22 m of 23.82 g/t gold and 6.65 m of 5.69 g/t gold, were encountered.
On December 24, Globex's 50% subsidiary, Duparquet Assets Ltd., received USD 500,000 from Emperor Metals for the Duquesne West Option. In January, another share of Emperor will be issued. This shows how satisfied the option holder is with the gold property. Emperor has done extensive drilling on the property to define a mineable resource and intends to develop the project further. This is just one of over 250 assets, and Globex has already negotiated royalties for 106 of them. The stock is trading close to its yearly high of CAD 1.18 at CAD 1.16, giving it a market capitalization of just CAD 65 million.
Novo Nordisk – An entry opportunity?
Novo Nordisk also secures the basis for its success story by using high-quality raw materials that are essential for the production of drugs for diabetes, obesity and other chronic diseases. Active pharmaceutical ingredients such as semaglutide and insulins are central, supplemented by biotechnological materials such as proteins, peptides and enzymes. Likewise, stabilizers, packaging materials, energy, and water play key roles. Sustainability is a high priority: conflict-free minerals and environmentally friendly procurement are standard practice. Investments in modern production facilities effectively secure the increasing global demand for GLP-1 drugs.
Novo Nordisk is currently under pressure from several sides. The CagriSema study, once seen as a great promise, delivered disappointing results: a weight loss of 22.7% after 68 weeks fell short of the targeted 25%. This puts Novo well behind Eli Lilly, whose drugs such as Zepbound and Retatrutide are performing impressively at 24% in just 48 weeks. For the Danish pharmaceutical giant, this is a blow in a hotly contested market. But that is not all. Supply problems, cheaper semaglutide-based generic products and possible Medicare price negotiations from 2027 are creating additional headwinds.
All of this is leading to fiercer competition in a market that is estimated to be worth a whopping USD 130 billion by 2030. Novo Nordisk is now being asked to act faster and more innovatively to defend its pioneering role. There are three factors that nevertheless make the share appear attractive. Firstly, Novo Nordisk's valuations have improved markedly, with its price-to-earnings ratio falling below its historical average. Secondly, the Company continues to have growth opportunities, particularly through the development of new indications such as for fatty liver disease and heart failure. Thirdly, the Company remains a leading player in GLP-1 research – an area with enormous long-term potential. Currently, the share price is at USD 87.37.
In terms of commodities, these three companies are well positioned, although they face different opportunities and challenges in the year ahead. Volkswagen is working on its transformation towards electromobility and is currently leaving no stone unturned to remain competitive. Globex Mining has an extensive portfolio of commodities in safe jurisdictions and is benefiting from geopolitical tensions and export restrictions. Novo Nordisk has suffered a setback with the worse-than-expected results of the CagriSema study**, but the share price decline appears exaggerated.
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.
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