Tag: Motley Fool

On Wednesday the S&P/ASX 200 Index (ASX: XJO) was out of form and dropped notably lower. The benchmark index fell 1.1% to 6,607.1 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

ASX 200 expected rebound.

It looks set to be a much better day for the Australian share market on Thursday. According to the latest SPI futures, the ASX 200 is poised to open 129 points or 2% higher. This follows a strong night of trade on Wall Street after the Democrats came close to taking control of the Senate. In late trade the Dow Jones is up 1.7%, the S&P 500 is up 1.1%, and the Nasdaq has risen 0.3%.

Democrats on verge of Senate victories.

US stocks rose strongly overnight after vote counting in Georgia appeared to point to the Democrats winning both Senate races. This will open a path to a progressive policy switch in Washington. This is because if both Democrats win, it would mean a 50-50 tie in the upper chamber. However, with Vice President-elect Kamala Harris as the tiebreaker vote, the Democrats will effectively have control of the Senate. This outcome could allow the passing of new coronavirus relief, raising hope for the country’s economic recovery.

Bank shares given conviction buy ratings.

According to the AFR, Citi’s US bank analysts believe Australia and New Zealand Banking GrpLtd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) shares are in the buy zone even after their strong final quarter gains. The broker has ANZ and Westpac on its conviction buy list but has downgraded National Australia Bank Ltd (ASX: NAB) to neutral after a particularly strong run. It expects the big four banks to resume paying out up to three-quarters of their profits as dividends.

Oil prices continue to rise.

It looks set to be another positive day for energy producers such as Oil Search Ltd (ASX: OSH) and Santos Ltd (ASX: STO) after oil prices continued to rise. According to Bloomberg, the WTI crude oil price is up 1.8% to US$50.83 a barrel and the Brent crude oil price is up 1.7% to US$54.50 a barrel. This follows a surprise production cut by Saudi Arabia.

Gold price sinks lower.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) could spend the day in the red after the gold price sank lower. According to CNBC, the spot gold price has fallen 2.2% to US$1,911.80 an ounce. This was driven by a rebound in the US Dollar and the widening of treasury yields.

More reading

• ASX 200 drops 1.1%
• ASX 200 down 0.5%: Energy shares jump, big four banks fall, Zip climbs higher
• Why Fortescue, Nick Scali, Santos, & Zip shares are charging higher
• ASX energy shares on watch after oil prices surge higher
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) dropped by 1.1% today to 6,607 points.

Over in US political news, it seems the US Democratic Party is poised to win the US senate with wins in Georgia.

Here are some of the highlights from the ASX:

Oil rises

The oil price rose after it was reported that Saudi Arabia is going to cut oil production. According to reporting by various media, such as the Australian Financial Review, Saudi Arabia is going to cut 1 million barrels of oil a day of production.

This caused the oil price to rise by around 5% to a 10-month high because the global oil market will receive less supply than what was expected.

The best-performing business ASX 200 share was Oil Search Ltd (ASX: OSH). The Oil Search share price went up by 5.7%. Other oil producers also climbed today. The Beach Energy Ltd (ASX: BPT) share price went up around 2%. The Woodside Petroleum Limited (ASX: WPL) share price rose by 1.7%. Finally, the Santos Ltd (ASX: STO) share price rose by around 2%.

Biggest market risers

Other than Oil Search, there were a few other businesses that rose by more than 4%. One of the best performers was the Pilbara Minerals Ltd (ASX: PLS) share price which saw an increase of around 7%.

Another one in the green was the IGO Ltd (ASX: IGO) share price which went up by 4.4%. The Genesis Energy Ltd (ASX: GNE) share price went up by 4.4%. The Contact Energy Limited (ASX: CEN) share price grew by around 4%.

Within the ASX 200, Oil Search and IGO were the best performers. The Worley Ltd (ASX: WOR) share price went up 3.6%, the AMP Limited (ASX: AMP) share price went up 2.3% and the Incitec Pivot Ltd (ASX: IPL) share price rose by 2.2%.

Biggest market declines

Many of the ASX 200’s biggest businesses declined today. The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price fell 0.8%, the BHP Group Ltd (ASX: BHP) share price fell 0.2%, the Commonwealth Bank of Australia (ASX: CBA) share price declined 0.4%, the CSL Limited (ASX: CSL) share price declined 2.5%, the National Australia Bank Ltd (ASX: NAB) share price dropped 1.2%, the Rio Tinto Ltd (ASX: RIO) share price fell 1.7% and the Wesfarmers Ltd (ASX: WES) share price declined 1.5%.

The biggest declines in the ASX 200 were all more than 4.5%. The Nanosonics Ltd (ASX: NAN) share price dropped 7.1%, the Polynovo Ltd (ASX: PNV) share price fell 6.4%, the Bravura Solutions Ltd (ASX: BVS) share price dropped 4.7%, the Megaport Ltd (ASX: MP1) share price dropped 4.7% and the Premier Investments Limited (ASX: PMV) share price went down 3.1%.

More reading

• 2 fantastic ASX mid cap shares to buy
• Why the Pilbara Minerals (ASX:PLS) share price jumped 8% to a 52-week high
• Goldman points to commodities super-cycle: Which ASX mining shares will benefit?
• Why a2 Milk, AVZ Minerals, Nanosonics, & Premier Investments are dropping lower
• What strong jobs data means for ASX 200 shares

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd and Premier Investments Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended MEGAPORT FPO and Nanosonics Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Generally, an individual’s risk appetite will fall with age. This is because someone in their 20s has a lot more time to recoup their losses compared to someone in their 60s who is nearing retirement and will soon be reliant on their current nest egg to fund their future lifestyle.

In light of this, it may be important to focus on capital preservation when you are reaching retirement and select shares that are consistent with your risk profile and investing timeframe.

With that in mind, here are a couple of shares that could be suitable for a well-balanced retirement portfolio:

National Storage REIT (ASX: NSR)

National Storage could be a good option for a retirement portfolio. It is one of the region’s largest self-storage operators with a total of over 200 centres in the ANZ market. Through this growing network the company provides tailored storage solutions to tens of thousands of residential and commercial customers.

The good news is that management still sees plenty of room to grow both organically and through acquisitions and developments. The latter is thanks to the company operating in a highly fragmented industry.

According to a note out of Ord Minnett, its analysts have an accumulate rating and $2.05 price target on its shares. The broker is forecasting an 8 cents per share dividend in FY 2021 and 9 cents per share in FY 2022. Based on the current National Storage share price, this represents 4.25% and 4.8% yields.

Transurban Group (ASX: TCL)

Another option for retirees to consider is Transurban. This leading toll road operator owns a collection of important roads in Australia and North America.

Due to the quality of these assets and their strong pricing power, Transurban appears to be well-placed to increase its dividend at a solid rate over the next decade once the pandemic passes.

In the meantime, analysts at Macquarie think it is worth being patient with the company. It has an outperform rating and $15.93 price target on its shares. The broker is forecasting a 41.9 cents per share dividend in FY 2021 and then a 58 cents per share dividend in FY 2022. 

Based on the latest Transurban share price of $13.32, this will mean yields of 3.15% and 4.35%, respectively.

More reading

• Leading brokers name 3 ASX shares to sell today
• 2 ASX dividend shares for income investors
• Top brokers name 3 ASX shares to sell today
• These ASX dividend shares offer investors attractive yields
• Top brokers name 3 ASX shares to sell next week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Medical devices company ResMed Inc (ASX: RMD) had a successful year in 2020, with operating profit growing by more than 24%. As a result, the Resmed share price returned more than 20% for the investor. This, in a year dominated by the coronavirus pandemic.

Can the company improve on this share price performance in 2021? Let’s take a look at the opportunities and challenges ahead for ResMed this year.

First, the numbers…

For the full year of FY20, the company’s operating profit grew 24% to US$890.9 million.

ResMed then followed this up with a strong first-quarter FY21, with first-quarter revenues increasing by 10% against the prior comparative period to US$751.9 million, while net operating profit surged 27%.

A key driver of this growth was its Europe and Asia markets, which delivered a 22% increase in revenue during the quarter.

Management advised that the sales were driven by its device product portfolio, including an increased demand for ventilators due to COVID-19.

Big opportunity for its devices

ResMed is one of only two leading players in the global obstructive sleep apnea market (OSA). Its biggest competitor is the Dutch multinational, Philips.

These two companies combined make up an estimated 80% of the US$5 billion market. 

Analysts believe the OSA market is only 20%-30% penetrated, out of a total addressable market that includes 24 million people with moderate to severe sleep apnea, and 30 million with mild cases.

ResMed has carved a nice niche in this space, and its brand, along with Philips, is well recognised.

In addition to OSA devices, ResMed also stands to benefit from the trends in respiratory health, which was exacerbated by the COVID-19 pandemic. In 2020 alone, the company sold more than $US40 million worth of pandemic-related ventilator units.

The company will also benefit from the increasing trend towards out-of-hospital healthcare, and at-home digital health monitoring.

Competition

As mentioned, ResMed is facing strong competition from its key rival, Philips.

The devices sold by both companies have similar functionality, and command substantial price premiums over less well-known brands.

For example, ResMed’s OSA devices are priced around 13% higher compared to those made by Fisher & Paykel Corp Ltd (ASX: FPH), one of the smaller players in the OSA market.

Growth by acquisitions

Resmed is attempting to grow fast by acquiring smaller players. 

In 2016, it acquired Brightree for US$800 million, which gave it access to Brightree’s clinical software applications for the post-acute care industry.

This was followed by the acquisition of MatrixCare in 2019 for US$750 million, which has enhanced ResMed’s ability to offer out-of-hospital software to patients and healthcare providers.

Where’s the ResMed share price heading in 2021

As mentioned, the ResMed share price lifted more than 20% in 2020.

Where the share price will go to in 2021 will largely depend on whether ResMed is able to fend off competition from its rival Philips, and continually come up with new devices ahead of the competition.

At the time of writing, the ResMed share price is trading lower by almost 2% at $27.09. It commands a market cap of $9.9 billion.

More reading

• Which ASX 200 healthcare shares delivered the top returns in 2020?
• 2 ASX growth shares to buy in January
• 4 of the best ASX shares to buy in 2021
• 3 top ASX share picks for 2021 from NZ brokers
• Buy these ASX blue chip shares in 2021

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Fortunately for growth investors, the Australian share market is home to a number of companies growing at a very quick rate.

Two ASX growth shares that have been tipped as buys for growth investors are listed below. Here’s what you need to know about them:

Altium Limited (ASX: ALU)

The first growth share to look at is Altium. It is the printed circuit board (PCB) design software provider behind the Altium Designer and cloud-based Altium 365 platforms. The company also has a number of smaller businesses with promise such as Octopart. This is a search engine for electronic parts.

Altium has been growing at a strong rate over the last few years thanks to its exposure to the Internet of Things and artificial intelligence booms. These markets are underpinning exceptionally strong demand for electronic design software and are expected to continue growing strongly for a long time to come. This bodes well for Altium in the 2020s.

Analysts at Morgan Stanley are confident on its future. They have an overweight rating and $40.00 price target on the company’s shares.

Kogan.com Ltd (ASX: KGN)

Another growth share to look at is Kogan. It is a growing ecommerce company which has benefited greatly from the pandemic accelerating the shift to online shopping.

This has underpinned significant customer, sales, and earnings growth in FY 2020 and has even continued in the new financial year despite bricks and mortar stores reopening largely as normal.

In November, Kogan revealed that its gross sales for the first four months of FY 2021 were up 99.8% on the prior corresponding period. Pleasingly, its earnings have been growing even quicker thanks to margin expansion. This led to gross profit growth of 131.7% and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 268.8% for the four months.

This growth looks set to be given a boost in the second half from the acquisition of New Zealand-based online retailer Mighty Ape for $122.4 million. 

Credit Suisse is a fan of Kogan and has an outperform rating and $20.60 price target on its shares.

More reading

• How to invest in ASX shares in a post-COVID world 
• 3 great ASX tech shares to buy
• 2 ASX shares to buy that are growing rapidly
• Leading brokers name 3 ASX shares to buy today
• ASX 200 up 0.8%: CBA storms higher, Link sinks, tech shares rise

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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PayGroup Ltd (ASX: PYG) provided a sales update for the FY21 to the market today, sending the share price higher. The PayGroup share price closed the day up 13.45% at 67.5 cents.

The human capital management (HCM) solutions provider noted some record numbers for the business for FY21. Let’s take a look at them.

What’s driving the PayGroup share price up?

Sales growth

For the 9 months to 31 December 2020, PayGroup experienced significant sales growth. More specifically, the company reported signing a total contract value (TCV) of $8.2 million for FY21 period to date.

This indicates a 200% increase in TCV compared to the prior corresponding period. Similarly, this represents an increase of 149% on FY20 total combined sales.

PayGroup noted that 34% of the total $8.2 million TCV was signed during the most recent quarter. Management puts this milestone down to overall success across all business divisions of the group. Reportedly all contracts signed during this time are for a secured minimum 3-year term.

The new contract sales have also added 115 new client entities to the group, 37 of which are derived from PayGroup’s Australian subsidiary AstuteOne.

Acquisition performance

In addition to the sales update, PayGroup also provided details on the performance of the recent acquisitions of TalentOz and Payroll HQ. Stating that these acquisitions have further cemented the group’s payroll and HCM capabilities across Australia, Malaysia, and New Zealand.

Reportedly, both acquisitions have provided sales growth to the group through their continued integration. The group intends to seek out further growth opportunities for TalentOz and Payroll HQ heading into FY22.

The PayGroup share price has increased by 21.6% since it announced the completion of its TalentOz acquisition.

Looking ahead

PayGroup managing director Mark Samlal welcomed the results, saying:

We continue to break the group’s sales records quarter on quarter. It is most pleasing that the contribution comes from all parts of the PayGroup network and business divisions – including our Global Partner Program and recent strategic acquisitions, both which continue to deliver strong results.

PayGroup is committed to expanding our global sales channels to sustain the momentum generated in FY21, and our strong sales is a direct indication of our top line growth ambitions – with recent contract signings impacting not just FY21, but our forward planning for FY22 and beyond.

More reading

• Why the PayGroup (ASX:PYG) share price surged 11% today

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Sheffield Resources Ltd (ASX: SFX) share price climbed higher today following the execution of binding definitive documents with YGH Australia Investment Pty Ltd (Yansteel).

At the closing bell, the Sheffield share price finished the day up 4.1% to 38 cents. Heading the other way, the S&P/ASX 200 Materials Index (ASX: XMJ) ended down 1% to 16,156 points.

What did Sheffield announce?

According to its release, Sheffield and its potential joint venture partner, Yansteel executed binding definitive documents to become equal strategic partners on the Thunderbird Mineral Sands project.

Sheffield advised that both parties are working towards fulfilling the remaining conditions set out. Once finalised, a lender agreement and a $130.1 million payment from Yansteel will follow in the coming weeks.

At completion of the joint venture, a final bankable feasibility study will be undertaken. The report will assess an in-depth review of project potential in terms of minable resources and revenue that can be generated.

Should all go to plan, project financing arrangements and a final investment decision will be made sometime this year.

What did the managing director say?

Commenting on the deal, Sheffield managing director Bruce McFadzean said:

This is another exciting step forward for Thunderbird, our partnership with Yansteel, and for Sheffield Resources’ investors and stakeholders.

In Yansteel we have a partner that is equally committed to the project and we are both looking forward to a long and productive relationship. What is particularly pleasing is that both parties are committed to creating hundreds of jobs in the Kimberley, for decades to come.

Sheffield share price snapshot

The Sheffield share price has lifted more than 480% higher from its all-time low of 6.5 cents reached in March last year.

The company’s shares hit a 52-week high of 48 cents in December following Foreign Investment Review Board (FIRB) approval.

Based on current share price levels, the company commands a market capitalisation of around $131 million.

More reading

• Sheffield (ASX:SFX) share price whizzes 34% higher, hitting 52-week-high

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re looking for an easy way to invest in international shares for diversification, then exchange traded funds (ETFs) could be just what you need.

But which ETFs should you look at? Here are two popular ETFs that have generated strong returns for investors:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF to look at is BetaShares Asia Technology Tigers ETF. It allows investors to invest in the biggest and brightest technology and ecommerce companies that have their main area of business in Asia. BetaShares notes that this ETF provides diversified exposure to a high-growth sector that is under-represented in the Australian share market.

There are a total of 50 companies included within the ETF. Among these you will find industry giants such as Alibaba, Baidu, JD.com, and Tencent Holdings. The latter is the company behind the hugely popular WeChat app, which has over 1.2 billion users. It is also a substantial shareholder of Afterpay Ltd (ASX: APT).

Over the last 12 months, the BetaShares Asia Technology Tigers ETF generated a return of 59% for investors.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another ETF to look at is the BetaShares NASDAQ 100 ETF. This ETF aims to track the performance of the NASDAQ 100. This comprises 100 of the largest non-financial companies listed on Wall Street’s famous exchange.

Among the 100 companies you will find tech giants such as Amazon, Apple, Microsoft, Netflix, and Google parent, Alphabet. In addition, investors will be gaining a slice of non-tech companies. This includes Gilead Sciences, Lululemon, Moderna, and Starbucks.

BetaShares thinks this ETF is a good option for investors as it has a strong focus on technology. It feels this gives investors diversified exposure to a high-growth potential sector that is under-represented in the Australian share market.

Since this time last year, the BetaShares NASDAQ 100 ETF has provided a return of 24% for investors.

More reading

• 3 great ASX tech shares to buy
• 2 top ETFs to buy for growth
• Got money to invest? Here are 3 ASX shares to buy
• 2 fantastic ETFs to buy in 2021
• 2 fantastic ETFs for ASX investors to buy

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A group of ASX-listed companies have started measuring their environmental, social and governance (ESG) worth to report alongside their financial numbers.

Reporting ESG performance had always been an inexact science, unlike well-established accounting standards.

But the World Economic Forum in September published a set of metrics that corporates can use to evaluate their ESG chops.

Using this framework, 6 Australian-listed companies announced Wednesday that they would start reporting ESG metrics in their quarterly reports required by the ASX:

• Euro Manganese Inc (ASX: EMN)
• Vulcan Energy Resources Ltd (ASX: VUL)
• Elixir Energy Ltd (ASX: EXR)
• Minbos Resources Ltd (ASX: MNB)
• MyFiziq Ltd (ASX: MYQ)
• WhiteHawk Ltd (ASX: WHK)

Melbourne tech firm Socialsuite is providing the software for these companies to report their non-financial metrics.

Vulcan Energy is a mining company with a $259 million market capitalisation that’s developed a method to produce lithium with minimal carbon emissions.

Managing director Francis Wedin said his business was proud to be one of the first adopters of the new standard ESG metrics.

“Positive impact and ESG is the core reason we started the company,” he said.

“We know that by delivering against ESG we can create long term sustainable value, while driving positive outcomes for the business, the economy, society, and the planet.”

Most investors care about ESG now

Unfortunately for those trailblazing companies, 20% of Australian investors would take higher returns over their own moral code.

But this also means 80% of local investors care about how the companies they buy into align with their personal beliefs.

The rise of ESG as a factor in investment choices was prominently on display last year after Rio Tinto Limited (ASX: RIO) blew up the historically significant Juukan Gorge.

The multinational mining giant initially defended its actions, saying its actions complied with the law. 

An internal investigation later stripped $7.2 million of bonuses off 3 executives, but this only caused more public outrage for putting a ‘valuation’ on the priceless site.

But sustained pressure from major shareholders, including some of Australia’s biggest superannuation funds, sent the 3 executives packing – albeit with massive enough golden handshakes that would mean they never had to work again.

“Investors have stepped up in this instance and demonstrated that they will not accept corporate misinformation and the absolute disrespect to cultural sites that has become Rio’s modus operandi,” Australasian Centre for Corporate Responsibility legal counsel James Fitzgerald told The Motley Fool at the time.

“Shareholder democracy and investor action is alive and well in Australia.”

The spectacular 700% rise in the share price of Tesla Inc (NASDAQ: TSLA) last year was also a case in point. Many retail investors were thrilled with backing a company they considered a part of the solution, rather than the carbon-emitting establishment.

More reading

• The Vulcan (ASX:VUL) share price just hit an all-time high
• MyFiziq (ASX:MYQ) share price falls despite announcing new app release
• Why Dacian Gold, Lovisa, MyFiziq, & Zip shares are dropping lower
• Euro Manganese (ASX:EMN) share price up more than 180% in 2020
• Here’s why the WhiteHawk (ASX:WHK) share price has rocketed 26% higher today

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Vulcan Energy Resources Ltd (ASX: VUL) share price has spent the last 12 months climbing its way from 15 cents per share, to today’s intraday all-time high of $3.41 – easily outpacing the S&P/ASX 200 Index (ASX: XJO)

Although there is no new news out from the company today, we can take a look at the most recent update and recap the recent developments.

A closer look at Vulcan

Since being acquired in 2019, Vulcan has been aiming to be the world’s first ‘Zero Carbon Lithium’ producer. More specifically, the company hopes to produce battery-grade lithium hydroxide with a net-zero carbon footprint.

Vulcan expects to leverage its geothermal and lithium project in the Upper Rhine Valley of Germany. By using the same brine to produce both lithium and geothermal energy simultaneously, the company believes it will address the current issues with lithium in Europe.

If achieved, Vulcan aims to then supply the lithium-ion battery and electric vehicle market in Europe – the fastest growing in the world.

In December 2019, Vulcan completed an Inferred Mineral Resource Estimation of its lithium resource. The results suggest that it is the largest lithium resource in Europe, and significant in size on a global level.

What’s been energising the Vulcan share price?

The Vulcan share price has been trending upwards since 21 December last year. On this day, Vulcan updated the market to a recent German legislative change. The legislation is in favour of an Act amendment to geothermal electricity production. This amendment will decrease the reduction rate of feed-in tariffs for geothermal electricity in Germany. Rather than the existing decline of 5% per year, the amended rate will be 0.5% per year.

This would make geothermal energy offsetting more economical for Vulcan. Additionally, once a geothermal project starts operating, the feed-in tariff at the time is locked in for 20 years.

These legislative changes are off the back of the European Commission proposing mandatory requirements on carbon footprints from lithium miners. The requirements would result in all lithium-ion batteries in Europe to include a carbon intensity performance class label from 1 January 2026. If the producer does not meet the carbon footprint threshold they will be barred from operating.

The Vulcan share price closed the day up 10.53%, at $3.36 per share. The company’s market capitalisation now sits at $239.96 million.

More reading

• Vulcan (ASX:VUL) share price rises 20% and breaks new record. Here’s why.
• ASX small caps could get a boost with the Aussie dollar hitting 28-month highs

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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