With gold over USD 3,400 - 100% gains in no time: Gerresheimer, Desert Gold, Hensoldt and RENK

The Market Online

04-06-2025

Rumors about Jerome Powell's resignation were circulating at the beginning of the week. Described as very 'hawkish,' meaning he strictly aligns interest rates with inflation, he is an uncomfortable contemporary for President Donald Trump. The US administration needs a lot of money to get the outdated infrastructure and the entire economy back on track. Numerous campaign promises for a flourishing America can only be fulfilled by the flamboyant frontman if sufficient funds are available. This is a difficult undertaking due to the very high level of government debt. The credit rating agency Moody's is not intimidated by the president's threats and recently downgraded the US credit rating by one notch to AA1. Triple-A status is now history. This is a perfect setup for gold, with the precious metal rising again to over USD 3,400. Where are the opportunities for investors?
Gerresheimer shareholders are currently experiencing just how quickly a share price can plummet. The specialty packaging manufacturer's shares tumbled by more than 25% at the beginning of the week and only found solid ground again at around EUR 47. This marks a three-year low for the MDAX stock, and no significant recovery is visible so far. The current profit warning has a painful impact on the original forecast for 2025, which now seems unachievable for the time being. Instead of moderate growth in net profit, Gerresheimer now expects a low double-digit decline. As a precautionary measure, the dividend for 2024 will be almost eliminated, with only 4 cents being distributed instead of EUR 1.25. Nevertheless, revenue is expected to increase slightly with an EBITDA margin of approximately 20% on average for the year. Analysts reacted coolly, with JPMorgan lowering its price target from EUR 122.50 to just EUR 108 but maintaining its 'Overweight' rating. Jefferies remains at 'Buy' and has left its price target at EUR 86. The German SME appears to be attracting much interest, as the Company has been in the spotlight of financial investors for years. Recently, rumors of an imminent takeover by Warburg Pincus and KPC Capital Partners caused the share price to rise to over EUR 66. On the LSEG platform, the 12-month consensus is currently EUR 58.50. The share price was trading above EUR 120 in 2023 and now has a single-digit P/E ratio for the next three years. That is cheap! Desert Gold – There is a lot to look forward to
With Moody's downgrade of the US credit rating, 30-year bond yields have swung to over 5%. Historically, this level has always been perfect for a rise in the gold price, as inflation concerns cause investors to flee to the yellow metal. The persistent claim that gold pays no interest is clearly refuted by an annual return of over 9% since 2000. Gold has regained strength solely due to the devaluation of the US dollar and the corresponding loss of purchasing power. Even central banks are constantly buying, with Switzerland, China, Russia, and India standing out on the list of buyers. It is also gradually becoming apparent that US bonds are no longer the first choice for foreign exchange reserves. China has already sold over 30% of its holdings and is now only a minor subscriber to new issues. This is a difficult situation for the highly indebted US.
Things are developing as hoped for Canadian explorer Desert Gold Ventures (TSXV:DAU). The Preliminary Economic Assessment (PEA) is underway, which means that the junior company will soon be able to start small-scale leach-testing. The promising properties, covering an area of approximately 440 square kilometers, are located in the Senegal-Mali Shear Zone (SMSZ), also known as 'Elephant Country.' The term describes the estimated 26 million ounces of reserves held by major players Barrick, B2Gold, Endeavour, Allied Gold, Hummingbird, Resolute, and BCM, which have only been partially explored or mined to date. Desert Gold has already identified 1.1 million ounces of gold near surface with 95,000 meters of drilling. CEO Jared Scharf and his team of geologists are confident that the upcoming evaluations will reveal an even higher value. Rumor has it that several high-ranking visitors have already visited Desert Gold's properties. With gold prices so high, the excitement is growing every day! When will a major player snap up the last remaining land in 'Elephant Country'?
Desert Gold (DAU) shares have posted double-digit gains this year, but the next surge could be just around the corner. For some time now, the price of the approximately 240 million outstanding shares has been moving sideways between CAD 0.07 and CAD 0.08. With a market capitalization of around CAD 18 million, Desert Gold is significantly undervalued compared to its peers. A speculative buy! Hensoldt and RENK – Steep, steeper, doubled
In addition to the gold market, defense stocks are currently booming. The never-ending conflicts in Ukraine and the Middle East are fueling demand for security and rearmament in NATO countries, which had tended to invest in disarmament during the long 70-year period of peace. Now, there is a dramatic 180-degree turnaround, with even former pacifists in the political landscape now advising billions in investments in military technology. The German Armed Forces alone are expected to receive a budget of more than EUR 100 billion over the next five years. For European defense stocks, this is almost daily grist for the mill.
Hensoldt and RENK have gained 100% and 180%, respectively, in the last three months. Looking at the fundamental figures, analysts are currently unable to adjust their estimates to the incoming order situation. JPMorgan hastily adjusted its price target for Hensoldt from EUR 50 to EUR 110 to avoid looking completely out of touch in the analyst rankings. Other research houses are somewhat more conservative, setting price targets between EUR 45 and EUR 85, resulting in an average of EUR 67. However, everything has already been equalized, with Hensoldt exceeding the EUR 100 mark at the beginning of the week. According to the LSEG platform, the estimated 2025 P/E ratio is now 54, and the price-to-sales ratio (P/S) is almost 5. The picture is similar at RENK, where the Company is emulating industry leader Rheinmetall. Since investor Triton placed the stock at EUR 16 in 2024, the price has quintupled. The estimated 2025 P/E and P/S ratios are 62 and 6.3, respectively – what more can be said? Perhaps the order volume is so overwhelming that price hikes are fully justified. In this case, taxpayers do not get a say – the newly elected Bundestag has already approved the largest wave of defense investment in modern history by a majority vote. Prosperity and adversity are often close together. Looking back over the last three months, the stock market favored defense and gold stocks. RENK and Hensoldt are clearly on the rise, and Desert Gold has also seen double-digit growth. Only Gerresheimer was sent into a tailspin due to a profit warning. (Source: LSEG on June 3, 2025)
Due to ongoing geopolitical tensions, defense stocks are currently setting the tone. Meanwhile, long-term interest rates are rising in the background, which is also pushing up bond yields. Junior explorer Desert Gold is heading into an interesting year of transformation – with a valuation of CAD 18 million, or roughly USD 12 per ounce of gold in the ground, an acquisition is not unlikely. 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') currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a 'Transaction'). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
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