Rheinmetall is the clear leader in the defense sector. However, its stock has already performed very well. It is worth taking a look at second-tier candidates such as Steyr Motors and Deutz. The former has just strengthened its sales in the US. Analysts believe Deutz shares could break through the EUR 10 mark. And in the hydrogen sector? Old favorites Nel ASA and Plug Power are fighting for survival. Analysts see potential for growth at dynaCERT. The hydrogen-based retrofit kit for heavy-duty diesel engines saves customers money and allows them to sell emission certificates. With new German management, sales efforts in Europe are currently being ramped up. Revenues could nearly double within a year. And the stock?
dynaCERT: Is all the hype paying off?
dynaCERT (TSX:DYA) has been beating the advertising drum loudly in the first half of the year – especially in Europe. The German managers brought on board by the Canadian cleantech company are expected to use their automotive market knowledge and industry contacts to open up new markets. To date, dynaCERT has supplied customers in North America and South America.
While dynaCERT supplies customers in the oil and mining industries in America in particular and has already sold several thousand units, the focus in Europe is on logistics companies. The potential is even greater, as dynaCERT can make any diesel engine cleaner. Its core product, HydraGEN™, is a hydrogen-based on-demand add-on system that uses electrolysis to introduce tiny amounts of H₂/O₂ into the combustion process. This results in improved diesel combustion, reduced fuel consumption, and lower emissions. Users of the technology also receive emission certificates, which can be sold to generate additional revenue. The technology is designed as a retrofit solution for existing fleets, particularly in heavy-duty transport, buses, and construction equipment.
dynaCERT attended numerous trade fairs in Europe this year and spoke with potential customers. At an investor conference in May, the activities were described as a success. Leads in the triple-digit range were generated. At the same time, work is underway to optimize mass production and models for new areas. As a next step, dynaCERT plans to expand the application of HydraGEN to include diesel-powered trains and smaller vessels.
Only one or two orders will likely be required for dynaCERT shares to rise significantly. Revenue and earnings are expected to pick up noticeably as early as next year. Analysts at GBC Research expect dynaCERT to generate around CAD 21 million in 2026. This would almost double the expected CAD 12 million for the current year. Experts believe the stock could rise to EUR 0.48. The share is currently trading at EUR 0.085.
Steyr Motors expands US business
Following the hype in April, the Steyr share price has stabilized. Nevertheless, the share has more than tripled since the beginning of the year and is now worth EUR 250 million on the stock exchange. The engine manufacturer, driven by the defense business, still has to grow to reach this valuation.
The latest success in the US confirms that there is a lot going on at the Austrian company. Steyr has signed a new framework agreement with Laborde Products. The US partner is a supplier of marine and industrial propulsion solutions. The collaboration covers both civilian applications and new projects for the US Navy. The agreement has a term of four years and a total volume of around USD 15 million.
Steyr CEO Julian Cassutti commented: “The US is one of our strategic core markets outside Europe. Through the partnership with Laborde Products, we are not only strengthening our market position in the US market, which is one of the largest in the world in terms of volume in both the civil and military sectors, but we are also further expanding our service network – an important step in providing our customers with the best possible support.”
Similar to Steyr Motors, Deutz was also swept onto stock market traders’ buy lists amid the euphoria surrounding the new German government’s billions in spending on defense and infrastructure. Within a few months, the share price of the Company known for its diesel engines rose from EUR 4 to EUR 8. The high level has been maintained so far. This is because Deutz still has to grow into its current valuation of around EUR 1 billion.
Warburg Research recently confirmed its “Buy” recommendation. Analysts even see the fair value of Deutz shares at EUR 10.90. Experts expect order intake to rise in the second quarter. This should be important for the share price to continue its upward trend, as Deutz is coming off a challenging 2024. In the first quarter of the current year, revenue growth was 7.5%, and order intake rose by 30%. This trend must continue.
There has been no major operational news for some time. At the Annual General Meeting in May, shareholders approved a dividend payment of EUR 0.17 per share. Supervisory Board Chairman Dr. Dietmar Voggenreiter was optimistic about the future at the time: “The approval of all items on the agenda at today’s Annual General Meeting reflects the broad support for Deutz’s strategic direction. The positive share price performance in recent months also shows that Deutz is on the right track with the transformation it has initiated. The Supervisory Board will continue to support the Management Board in positioning the company for the future in order to create sustainable value for shareholders.”
It does not always have to be the big defense stocks, and certainly not the old hydrogen favorites. dynaCERT has stepped up its sales efforts in the current year. If rising order intake and decent revenues can be reported in the second half of the year, a multiple increase is possible. Steyr and Deutz are interesting second-tier defense companies. Both stocks have already performed well this year. A sideways movement with positive operating news is far from a bad outcome.
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