Alibaba: The Asian Dragon Has Awakened
For months, Alibaba was considered a major cause for concern by many investors, but now the tide has turned. The company has reached a settlement with the US Department of Justice. Alibaba is paying USD 600 million to settle a long-standing legal dispute. This takes a huge amount of pressure off the company, and from investors’ perspective, this vexing legal chapter is finally closed once and for all. The US Department of Defense is also granting Alibaba an important exemption from restrictive lobbying rules. This sounds like a political breakthrough across the board.
Operationally, the company is also performing noticeably better again. Its key cloud business grew by an impressive 38%. Losses in the low-margin fast-delivery segment are shrinking significantly. Major investors are also shifting significant capital from overvalued chip stocks to cheaper Chinese tech stocks. Alibaba is among those benefiting from this. Although some analysts have slightly lowered their price targets ahead of time, they almost without exception continue to recommend buying the stock. The share is once again rapidly approaching the technically important USD 120 level. Although it briefly dipped below USD 100, that level ultimately held as support. For investors willing to take on more risk, the stock now appears fundamentally attractive. The current risk-reward profile looks considerably more compelling than it did just a few weeks ago.
More aggressive investors could consider a long position around USD 110, with an initial price target of USD 145. The 200-day SMA currently stands at USD 145.90, making it a realistic target for the ongoing rebound. The stock appears to have meaningful catch-up potential, particularly now that the legal dispute that had weighed on sentiment has finally been resolved.
TKMS: A Windfall for the German Defense Contractor
From the “glitzy digital world of China,” our journey now takes us to the harsh reality of the German defense industry. Here, TKMS has recently been making quite a splash—and in a positive way. thyssenkrupp Marine Systems has not only landed one massive order but several at once.
The Bundestag’s Budget Committee has given the green light for the procurement of four MEKO A-200 DEU-class frigates. That represents an investment of EUR 6.3 billion. What makes this particularly noteworthy is that there is even an option for four additional ships, valued at around EUR 5.3 billion. The first frigate is scheduled to be completed as early as 2029.
But then came the bombshell: Canada has decided to order up to twelve Type 212CD submarines from TKMS. This is the largest submarine order in the company’s entire history. The submarines and related services alone are expected to cost around EUR 20 billion. When factoring in maintenance and operations over the coming decades, we are talking about a total volume of approximately CAD 100 billion, equivalent to roughly EUR 62 billion.
With an order backlog of EUR 20.6 billion, TKMS was already fully booked through the 2040s even before the Canadian order. Now, that is even more evident. This puts the company even more in the spotlight for global defense investors. Such enormous multi-billion-dollar contracts not only ensure full utilization of the shipyards but also reliably and steadily bring in fresh cash, year after year, generation after generation.
In an already extremely turbulent geopolitical climate, stocks like TKMS’s serve as an anchor of stability. The company has impressively held its own in a rough, highly competitive market.
There is, however, one downside: orders must first be converted into revenue and then into profits. This must be taken into account, especially in times of rising commodity prices. Likewise, orders can also be put “on hold” or withdrawn entirely.
The stock recently failed to break through the EUR 100 level. Despite the positive news flow, sellers used this price area to take profits, pushing the shares back down to a recent low of EUR 81.20. The 50-day SMA runs just below this level and should provide additional technical support. Investors willing to enter at current levels, using a relatively tight stop-loss and an initial price target in the EUR 110–120 range, may find an attractive risk-reward setup, supported by the company’s fundamentals.
Power Metallic Mines: Polymetals Turbo
We now leave the rugged realm of defense and dive into the rocky Canadian terrain and the raw materials it holds. Here, Power Metallic Mines is working on securing tomorrow’s supply of raw materials. The company focuses on polymetals. We are talking about copper, nickel, palladium, and platinum—precisely the coveted materials that our modern world urgently needs, among other things, for the energy transition. Recently, there were two highly exciting news reports.
On June 10, management announced the successful completion of a major financing round, raising an impressive CAD 28.2 million. This is a clear vote of confidence, and what makes it particularly noteworthy is the involvement of Canadian investment legend Eric Sprott. He alone acquired new shares worth CAD 2 million. With these now well-stocked coffers, the prestigious Nisk project in Quebec will continue to be aggressively advanced. The promising Jabul Baudan exploration project in Saudi Arabia is also expected to benefit greatly from these funds.
Just under two weeks later, on June 23, Power Metallic Mines delivered spectacular drill results from its ongoing winter program. In the Lion target area, the team encountered outstanding copper-equivalent grades.
We are talking about near-surface intercepts of 13.3 m grading an impressive 3.98%, followed by 5.26 m grading an exceptional 8.45% at greater depth. These are outstanding results that are considered exceptional even by geogeological standards. This drill data will now be incorporated into the company’s maiden mineral resource estimate, which is expected by the end of July and will lay the foundation for the project’s upcoming preliminary economic assessment (PEA).
Finally, if we look at the stock itself and the chart pattern, we see that Power Metallic Mines has broken out of its recent, rather persistent downtrend. The stock is now gradually testing the upper boundary of the wedge pattern at CAD 1.40. It is currently trading at around CAD 1.12. The stock is thus consolidating its recent rapid rise, which took it from just under CAD 1 to nearly CAD 1.18, in a healthy manner. This now presents an attractive opportunity for all interested investors to buy in on a rebound, especially since there is strong horizontal support at CAD 1.10 to 1.12, which protects the price from falling further. Upside potential is evident—and not just up to CAD 1.40. GBC analysts set a price target at an impressive CAD 3.
When seasoned investors such as Eric Sprott and other prominent shareholders commit capital to Power Metallic Mines, it may be worth taking a closer look. At the very least, the stock could deserve a place on your watchlist.
All three stocks discussed here have their own unique appeal for a well-diversified portfolio. Alibaba stands out as a fundamentally undervalued turnaround candidate in the highly competitive tech sector. The worst, especially from a legal standpoint, appears to be behind the company.
Meanwhile, TKMS stands out with bulging order books and guarantees worth billions in the defense industry. Here, there is nearly perfect planning certainty.
Power Metallic Mines, on the other hand, is a stock for bold and forward-thinking commodities investors. The company is well-financed and is delivering strong drilling results. The technical chart situation for Power Metallic currently offers an attractive entry point.
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