July 18th, 2022 | 14:57 CEST
Where scarcity turns to yield: TUI, Defense Metals, K+S
Table of contents:
TUI with comeback fantasy: Things are going better here than the share price suggests
One industry that is currently being hit hard by the general shortage is tourism. There is a shortage of staff both at the airport and in the restaurant at the destination. The share of the travel provider TUI has already marked its all-time low in the past week, which is actually a crisis signal, but people at TUI are quite optimistic. In the fall, Sebastian Ebel, the previous chief financial officer, will take the helm at the tourism group. TUI expects bookings in 2022 to be almost at pre-Corona levels. In the medium term, TUI wants to strengthen its balance sheet further and grow again.
While flights upon flights are being cancelled at Lufthansa, TUI is confident. Despite a high level of sick leave and thin staffing, almost all travellers should be able to fly for vacation. To this end, TUI has expanded its fleet in good time and booked new capacities. At the end of the Corona winter, TUI had shown itself optimistic in this respect. Since TUI turned dynamically into the plus immediately after its all-time low last Friday, the value could become attractive for traders - after a 50% loss in three months, an upward thrust could follow. Also, fundamentally it does not look so bad for TUI. However, the value is not a long-term investment.
Defense Metals: Rare earths are more in demand than ever before
Defense Metals is less dependent on economic speculation and employee sick leave. The Canadian Company is exploring its Wicheeda rare earths project in the Canadian District of British Columbia, where a 5,000m drilling program began in June. "Given the success of last year's 5,349m diamond drill program, we look forward to further defining the Wicheeda deposit. Particularly the high-grade northern area, testing near-resource exploration targets, and commencing our pre-feasibility level geotechnical studies," said President and Director Luisa Moreno. "As announced last week, metallurgical optimizations at the SGS Lakefield site are progressing rapidly and we look forward to releasing the results of this test work as information becomes available." The project is considered very promising and already has a Preliminary Economic Feasibility Assessment (PEA), which was released in January of this year and attests to the project's robust key data.
Rare earths are in demand for many future technologies: displays, batteries, and high technology for armaments and regenerative energies. Since China has played a dominant role in the rare earths market for many years, projects in other economies are rare. At the latest, since the discussion about de-globalization in the wake of the war in Ukraine and higher arms spending, even Japan has sworn off rigorous pacifism, rare earth projects are exciting. The Defense Metals share, like many growth stocks, has come down significantly. However, both the project and the Company are worth taking a closer look at. In the long term, there could be great potential here.
K+S: What does the crash mean?
The K+S share has been hot for months. Once criticized as a problem child, K+S now benefits from inflation and high food prices. The fertilizer company is in demand to keep agricultural production high and offset the consequences of the Ukraine war and climate capers. Although the share recently fell from EUR 36 to below EUR 20, the investment story remains intact. K+S remains a stock that is benefiting from the general shortage. However, the fall in the share price shows that the air to the upside is becoming thinner and thinner.
If investors want to invest in scarcity, they should keep a few things in mind: It is essential that companies with an operating business also have the capacity to profit from scarcity. This is the case with TUI, for example. Anyone who books here has a good chance of also being able to take off on vacation. K+S can also supply fertilizers. The already ambitious valuation of the Kassel-based Company is a negative factor. Defense Metals also offers an exciting niche: As an exploration company, Defense is not measured by quarterly or sales figures. The only thing that matters is the economic potential of the Wicheeda project. In a time when anything can happen, it can be an advantage that Defense is not thinking about becoming a producer for several years.
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