30 November 2006

Solar power revisited...

One of the most beautiful examples of how a Government can almost single-handedly create an entire industry is Germany. Thanks to the so-called "Feed-in Law" in Germany, customers receive preferential tariffs for solar generated electricity depending on the nature and size of the installation. This, and several other advantages of solar power created by German Government, has led Germany to become the fastest growing photovoltaics (PV) market in the world in 2005. This trend could also be seen on the German stock exchanges, where solar power companies have emerged from the ground like mushrooms. Stocks like SolarWorld AG (FRA:SWV), Ersol Solar Energy AG (FRA:ES6) and Q-Cells AG (FRA:QCE) have all performed very well until 2004, but it was in 2005 and early 2006 when most of these companies saw the stockmarket hype end. Alternative energy lovers quickly moved from solar power to ethanol and uranium and most solar stocks have not gained much since. The reason for this was one underlying question: can solar power become efficient enough without Government aid? And consequently, the question arose whether Government should keep funding the sector. Should fossil fuel costs go up, the efficiency gap decreases and it is expected that the US solar energy market - now considered to be five years behind Germany - would then become much more competitive. Washington-based Solar Energy Industries Association (SEIA) projects that the U.S. will be the world's biggest market, with $25 billion in revenues, within five years. SolarWorld AG could be one of the companies benefiting as it focuses on delivering cost-effective technology for the end-user, helped by its strategy of vertical integration. It now is the second largest integrated solar company in the world, after Sharp. This year, sales should increase 43% to just over EUR 500 million and group profits climbed 319% to EUR 63.3 mio y/o/y in the third quarter only! With such continued strong financial performance, the stock is expected to rise again soon. SolarWorld currently trades at around 21 x earnings, which is significantly below the sector's p/e of 27. Technically, the stock looks ready to go up again and I would consider a 50% increase from its current price of EUR 46.08 realistic in 2007.

28 November 2006

Paddy miners: a comparison

Compared to the Canadian and American stock exchanges, there aren't many mining companies listed in Europe and those that we tend to find easily, are not always very promising. But today, I want to shed my light upon three Irish mining pennystock companies: Ovoca Gold PLC (ISE:OVGL), Ormonde Mining PLC (ISE:ORQ) and Kenmare Resources PLC (ISE:KMR). All three also have a London listing. A small comparison:
  • First of all, those that are averse to taking any political risks might choose for ORQ, which has all of its mines located in Spain. Au contraire, OVGL has great exposure to Russia and KMR to politically unsafe Mozambique.
  • Metals-wise, there are also differences. KMR considers the Moma Titanium Minerals project its main asset. OVGL is mainly active in silver through what is said to potentially be the world's highest grade silver mine: Goltsovoye in Northeast Russia. In addition to that, its Kola Peninsula Exploration projects have gold, copper and molybdenum prospects. ORQ mainly operates gold mines in Spain, but also has prospects for copper, silver, tungsten and antimony (increasingly being used in the semiconductor industry) and recently found zinc at its La Zarza project.
  • Not unimportantly, when are these companies planning to start producing? KMR is certainly closest to production, with long-term potential for significant increases in output. ORQ has two projects in advanced evaluation stage: La Zarza (Au/Cu/Ag) and Salamón (Au) and several other projects in early evaluation stage. OVGL hopes to start producing in Q4 2008, which is partly the reason why the stock is so thinly traded.
Obviously, all three have potential. KMR's biggest plus is that its nearing production, but OVGL holds a very attractive silver development asset and has an experienced management team. ORQ however, clearly has the best mix of assets, but has an exploration risk to go with that. KMR seems best for the short term, while ORQ has my preference for the long-term. OVGL - I would say is the riskiest bet, considering the 'juniority' of its projects. But if you want to become filthy rich, you have to take some risks in the end... ORQ can be considered for buying at the current price of EUR 0.24. Update: This post has also been supplied as a column in Dutch to edelmetaal-info.

27 November 2006

Capitalia: the next prey?

Last year, Dutch bank ABN Amro took over Italy-based Banco Antonveneta. To many investors, this seemed a very risky move as the Italian banking industry is not known to be the easiest one to break into. ABN Amro has certainly experienced this, but succeeded at the end of the day. Banco Antonveneta, being the eight largest banking group in Italy, only holds a 3% market share in the Italian market and should therefore certainly not be considered the end of ABN Amro's Italian ambitions. Keeping in mind the above whilst also considering the 7.7% stake that ABN Amro holds in Rome-based Capitalia Gruppo Bancario (MIB:CAP), the most likely scenario is easy to guess. Reuters also mentions that 'corporate marriage' is high on shareholders' agendas. With net profit expected to rise 27% to EUR 1.4 bln, the bank is certainly expected to perform well, which is also reflected in the share price. To a certain extent, the share price includes an acquisition premium, but this premium did partly evaporate as Banca Intesa and Sanpaolo IMI merged to create Italy's biggest domestic lender and a European top eight bank. ABN Amro focuses on Antonveneta "for the time being", so says ABN Amro CEO Rijkman Groenink. No further comments were given with regard to a potential merger of Antonveneta and Italy's fourth largest bank Capitalia, but the likelihood increases day by day. Speculative buy at a current price of EUR 7.10.

26 November 2006

Banco Pastor: a strong focus on shareholder value

Banco Pastor S.A. (MCE:PAS) is the 7th largest banking group in Spain and may be considered a relatively small, but growing bank. The Group has 48% of its 569 branches in Galicia and 52% spread across Madrid, Catalunya, Levante and Andalucía and has a target of 700 branches in 2008. Banco Pastor expects to double the average shareholder value created by the Ibex35, based on an ROE increase from 13% in 2005 to 19% in 2008. Currently, Banco Pastor is well on schedule and this is certainly reflected in this year's share price growth. After the stock split in June this year, it moved from 10 to well over 14 in five months. Still, enough potential for the coming years. Dividend has been stable at an annual EUR 0.52 per share. Another reason to buy is that this bank considered one of Europe's most likely banks to be taken over, according to NCB. Currently, the fund looks overbought in the daily chart, hence it may be better to wait for a correction. Anywhere below EUR 13 should be a great chance to buy.

Gettin' Started

Dear reader, You're now looking at the start of something beautiful. I'm gonna be posting a lot of tips here on great ways to make money using international stock exchanges. Mostly, the European exchanges. For one simple reason: it's hard to find good information on European stocks, whereas there are loads and loads of blogs and websites on American stocks. Keep checking as I will be doing my utmost to make this a success. Hopefully with your support! Best regards, Joey Keasberry