Zefiro Methane, LVMH and thyssenkrupp: Three Promising Stocks Poised for a Re-Rating

Zefiro Methane: Potential for the Share Price to Triple

Millions of orphaned oil and gas wells stretch across the US. Many release harmful methane, while others block land needed for new infrastructure projects. Zefiro Methane measures emissions, plugs the wells and restores the land. Through its subsidiary Plants & Goodwin, the company covers a large part of the value chain.

Government support is expected to continue for years to come. Of the USD 4.7 billion allocated by the US Congress to remediate orphaned oil and gas wells, around USD 4 billion is not scheduled to be distributed until 2031. Zefiro’s core states account for approximately USD 778 million of the formula funding allocated to date. According to the company, Zefiro has secured around a quarter of the contracts funded through the infrastructure programme in its established markets so far.

The 2025/26 financial year brought the most significant operational progress to date. Revenue rose by 31.1% to a record USD 42.5 million. Gross profit rose 66% to USD 12.4 million, while the gross margin climbed from 23% to over 29%. At the same time, operating costs fell 10.2%. The bottom-line loss narrowed from USD 10.8 million to USD 3.5 million. The company's reported adjusted EBITDA swung from a USD 4 million loss to a USD 3.8 million profit.

In the final quarter, revenue grew 16.7% to USD 9.3 million, but gross margin slumped from 32.8% to 18.6%. Adjusted EBITDA was negative at USD 0.6 million, while the net loss amounted to USD 2.8 million. The integration of the Viking fleet acquired in May, start-up costs for the large Ohio contract and additional staff weighed on results. The centrepiece is a three-year contract from the Ohio Department of Natural Resources worth USD 19.6 million to plug around 200 wells. In September, the company added a government-funded contract worth USD 11.5 million, running from November 2026 through June 2029. Three further projects in Ohio and Pennsylvania are worth around USD 1.9 million in total.

The key question now is whether Zefiro can quickly utilise the new capacity. The foundations are in place. With Viking, Zefiro acquired five additional service rigs for USD 4.3 million and expanded its presence into five additional US states. According to the company, this increases annual revenue capacity by around USD 10 million. At the same time, Zefiro has the largest contractually secured project pipeline in its history. Zefiro now employs over 147 field staff and operates 25 drilling rigs, 14 wireline units and 6 cementing systems. Alongside higher utilisation, methane monitoring also offers scope for margin improvement. According to the company, this business generates margins roughly twice as high as the actual decommissioning work and is less dependent on seasonal conditions.

Additional demand comes from energy and data centre developers: before construction can begin on a site, abandoned wells must be properly plugged. In Pennsylvania, Zefiro plugged nine gas wells on the site of a former coal-fired power station. A natural gas-powered site for large data centres is planned there. In Louisiana, Zefiro also completed an energy infrastructure project worth around USD 5 million three weeks ahead of schedule. Before building new infrastructure, legacy risks sometimes have to be removed from the ground. This is precisely where Zefiro can make money.

A new study by Augsburg-based financial services provider GBC Research confirms the operational turnaround. The analysts expect revenue to jump 36.3% to USD 57.9 million in the current 2026/27 financial year. EBITDA is expected to rise to USD 10 million, corresponding to a margin of 17.3%. Based on this estimate, the enterprise value-to-EBITDA ratio is 5.7, and the P/E ratio is around 10.6. This is attractive and leaves the shares with considerable upside potential. For 2028/29, GBC already expects revenue of USD 75 million and an operating profit of USD 15 million.

Accordingly, the GBC price target is optimistic and remains unchanged at USD 1.50 (CAD 2.15). The research firm believes the stock still has the potential to more than triple. That sounds spectacular, but if the company succeeds in translating its recent momentum into sustainable growth and stable profits, such share price jumps would not be far-fetched. The market would then be likely to re-rate the shares. However, the balance sheet remains a risk factor. At the end of June, cash and cash equivalents of USD 1.1 million stood against financial liabilities of USD 14.0 million. Operating cash flow was slightly negative at USD 0.2 million. However, Zefiro successfully strengthened its equity through several capital measures successfully placed in the market.

The emissions credit business offers an additional opportunity. Zefiro has already completed its first sale under the American Carbon Registry's well methodology. Nevertheless, given the ongoing revision of this methodology, GBC does not expect any significant revenue in the first half of the financial year. A resumption in late 2026 or early 2027 would therefore be an additional earnings driver, but is not yet included in current revenue.

For investors willing to take risks, the shares remain attractive given their low valuation and substantial upside potential, and offer an exciting addition to a portfolio. The risk-reward profile also continues to improve. Revenue and gross profit are rising, EBITDA is positive, debt is falling, and the larger fleet lays the foundation for the next stage of growth. The next reality check will come at the latest with the first-quarter figures in mid-November.

LVMH: Hopes for an Operational Turnaround

The luxury group LVMH recently reported its results. The luxury goods conglomerate increased revenue organically by 1% in the third quarter. After nine months, this represents an increase of 2% on a comparable basis, while reported revenue fell by 2% to EUR 57.1 billion due to currency and consolidation effects.

The divisions performed very differently. Wines and Spirits as well as Watches and Jewellery each grew organically by 6% in the third quarter, while the Sephora-dominated retail division grew by as much as 8%. Yet the most important segment, Fashion and Leather Goods, contracted by 5%. In particular, weaker demand in China is weighing on performance, while the US, Europe and Japan recorded growth.

With an estimated 2027 P/E ratio of 16 and a dividend yield of around 3.4%, the shares are not expensive. Analysts also see scope for further share price gains at LVMH. There are 21 Buy recommendations versus 9 Hold ratings. Currently, only 1 recommendation is a Sell. On average, experts put fair value at just under EUR 490, around 25% above the current share price. But until Louis Vuitton and Dior show a clear turnaround, the discount remains justified. Conservative long-term investors can add LVMH shares to their watchlist, but a Buy signal will emerge only once the core business and the chart stabilise.

thyssenkrupp: Three Billion-Euro Value Drivers

At thyssenkrupp, the breakup of the group is drawing closer. According to Reuters, the materials trading subsidiary tk accelis is to be listed on the stock exchange as early as October 28. So far, only a listing by the end of the year has been officially confirmed. This is not a conventional IPO: thyssenkrupp will retain 51%, while the remaining 49% will be distributed to shareholders as a dividend in kind. 1 tk accelis share is to be credited to shareholders' securities accounts for every 20 thyssenkrupp shares. 

tk accelis employs around 15,500 people in 30 countries and generated revenue of EUR 11.4 billion in 2024/25. Jefferies estimates the enterprise value, including debt, at around EUR 3.6 billion. Operationally, the materials trader still has room for improvement: in the medium term, the adjusted EBITDA margin is expected to rise from its recent level of 2% to 4-5%. If this succeeds, tk accelis could develop into an interesting standalone turnaround story after the listing. 

A second billion-euro value driver lies in the stake in TK Elevator. The Finnish competitor Kone plans to acquire the lift manufacturer for EUR 29.4 billion, including debt. thyssenkrupp still holds a 16.2% stake in TK Elevator and would benefit proportionately from the value increase. However, the deal is subject to approval by the competition authorities. To address their concerns, Kone could sell the European business. According to reports, Mitsubishi Electric and Fujitec are considering bids; a valuation of at least EUR 5 billion is being discussed.

The steel business offers additional upside potential. As the largest shareholder, the Krupp Foundation currently sees a favourable window for a spin-off. This would gradually transform thyssenkrupp into a leaner investment holding company. This could reduce the conglomerate discount, which has been difficult to assess so far.

However, the restructuring is not yet complete. Analysts expect another loss for the financial year just ended, with a return to profitability expected in 2026/27. The company also faces political, competition law and operational risks. Nevertheless, the shares are interesting for bold investors. The listing of tk accelis could reveal hidden value and provide fresh short-term impetus for the share price.

Conclusion

Zefiro offers by far the greatest percentage upside potential, but also the highest risk. LVMH shares have become cheaper, but the company has yet to demonstrate an operational turnaround in its most important business area. thyssenkrupp, meanwhile, is a classic special situation: tk accelis, TK Elevator and the steel division could unlock value across several holdings. Speculative investors are betting on rising margins and strong share price gains at Zefiro, and on a successful breakup at thyssenkrupp. Long-term investors should continue to wait on LVMH for now.