CAPEX Vs. Stocks

CAPEX is a leading indicator for equity returns. 



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Sibanye-Stillwater

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Platinum, palladium and rhodium have all been moving higher and I expect them to go higher as China is loading more palladium and rhodium in their vehicles. China vehicle sales have rebounded as well. Both palladium and rhodium are in deficit. Platinum is going to be used in 3-way catalysts , which will boost platinum prices. Sibanye-Stillwater expects platinum to reach $2000 per ounce in 2025. Sibanye-Stillwater has exposure to all of these metals. SBSW's production numbers were very good. SBSW's EBITDA was $922 million in Q3 2020. This translates to $3.7 billion EBITDA per year. With a 5 multiple, SBSW should be valued at $18 billion market cap. So there is 50% upside. The company has no net debt. Net earnings were $1 billion per year in 2020, but is expected to rise 66% on higher rhodium/platinum prices and higher production numbers. Earnings per share are expected to be at $3.52 per share, which gives Sibanye-Stillwater a P/E of 4.8 which is very cheap. On top of thi...
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PGM Demand in the Next Decade

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PGM's will still be in high demand for about 5 years. Supply is coming mainly from South Africa, which is superior to Russia. We are transitioning from palladium to platinum/rhodium and that's exactly what Russia doesn't have.  
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Junk Bonds Vs. Stock Market

There is a correlation between junk bonds and the stock market. The junk bond market is a leading indicator for the stock market. Whenever junk bonds decline in value (yields go up), stocks will follow the decline. In 2007, junk bonds started their collapse, one year later in 2008, the stock market crashed. This is why we need to keep an eye on high yield debt (blue chart). Since the second half of 2014, this high yield debt has collapsed. Soon, the stock market (red chart) will follow.
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