With the new Omicron variant taking a toll on the global markets, uncertainties may present opportunities to buy the dip, buy high and sell higher, and hold on for dear life (HODL).
We're looking at three companies which may do just that: City Lodge, Zoom Video Communication, and Tietto Minerals. We're going to see how they have been making moves in the Tourism 🏨, Tech💻 and Gold 💎 industries, respectively, to survive before and after the pandemic.
Tourism 🏨
City Lodge Hotels Limited (JSE:CLH)
According to various sources, Africa being amongst the top 3 destinations to visit. We look into City lodge as the pick for tourism, with the company having a footprint across various African countries, owning the majority of its buildings.
Influenced by the global pandemic effect on the industry, in 2020, City Lodge raised R1.2 billion via a rights issue. According to the group, “the capital raised will bring much-needed stability to our financial standing and allow management to focus fully on operational matters”.
The group saw a steady improvement in occupancy as restrictions eased over the period, further opening its 168-room Courtyard Hotel Waterfall City, in March 2021. Despite the loss in earnings and revenue, the company reported during the 12 month period, which ended in September 2021, lenders showed the company strong support during the period whereby the company had access to a credit facility of up to R115 million.
As the new variant made headlines, global stocks tumbled together with the group’s share price taking a knock of over 18% on 26 November 2021, as the market opened, to R4 per share.
But to strengthen its balance sheet from losses that occurred during the unprecedented period, prior to the new variant, the group entered into a sale agreement - where it will be selling four of its East African hotels. Commenting on the sale agreement, the company added that:
“The proceeds from the disposal will be used to reduce debt levels, increase liquidity and support the working capital requirements of the group.”
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Tech 💻
Zoom Video Communication Inc (US:ZM)
Is history repeating itself? Investors are rallying for Tech stocks to gain from the demand that may arise from new restrictions that may be imposed.
Being at the forefront of the new normal, Zoom Video Communications’ online meeting platform, Zoom, has salvaged gains that enable the company to top $1 billion in revenue by the third quarter of its 2022 fiscal year, which represented a 35% year - over - year (YoY) increase. GAAP Income (measuring sales after paying for variable costs of production) from operations for the period increased to $290 million.
According to the company’s non-GAAP (measuring gross operating margin, distributable cash flow, free cash flow and adjusted EBITDA) report, income increased to $411.3 million. The company's earnings per share increased to $1.11 per share during the quarter together with its non- GAAP earnings.
Zoom founder/CEO Eric Yuan said:
“Through innovation and dedication, we will continue to deliver happiness to our customers. Looking forward, we expect to close the year between $4.079 to $4.081 billion in total revenue, representing approximately 54% year-over-year growth, alongside strong profitability and operating cash flow growth.
We are well on our way to becoming an indispensable platform for enterprises, individuals, and developers to connect, collaborate, and build in the flexible hybrid world of work. We believe our global brand, innovative technologies, and large customer base position us well for the future.”
To enable the modern workforce, Zoom announced during its Zoomtopia conference on 13 September 2021, that it has seven projects in the pipeline, with six other projects to enhance the group to navigate between different platforms, replicating our real life and beyond. A month later, the group CEO also mentioned that the company had been making some progress regarding the metaverse.
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Gold 💎
Tietto Minerals Limited (AUD:TIE)
Considered a hedge against inflation, gold is the commodity that has seen its prices increase in volatility as uncertainties of tapering and inflation weigh in, especially during the various waves. As we move into 2022, demand for gold was fueled by concerns of the Omicron variant disrupting the global economy.
With the gold prices influencing the performance of gold mining companies in the stock market, explorers are considered more volatile, especially during this period.
What is a gold explorer? Or an exploration company?
These are mining companies with little to no operations, exploring new ventures and opportunities to create a better balance sheet while creating value for the shareholder. These companies are usually associated with high volatility which may mean greater returns as the commodity price surges since their share prices are generally low.
Trading at AU$ 0.42, Tietto Minerals is a gold explorer that’s busy securing the bag through private investors. In its recent deals, the company successfully raised AU$85 million for the Abujar Gold project, a project expected to commence by the 2022 calendar year (CY22); these funds were raised through two-tranche placements.
Commenting on the project and funding, Dr Caigen Wang added that:
“With support for this A$85 million Placement, we now have funding in place to allow to build Abujar and transform Tietto into West Africa’s next gold producer as we bring the project into production on schedule in CY2022.
Abujar is an exciting and robust gold project, as demonstrated by our Definitive Feasibility Study delivered last month, and we are excited to enter this new chapter of Tietto’s history."
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Roundup
With all these new variants striking fear; especially in the stock market, where it may trigger major sell-offs (and investors may rush to panic sell) - this may create more volatility. But one thing to keep in mind as a long-term investor is that the company's progress and effort during this period remain the ultimate determining factor of where it may be after the global pandemic.
New to investing
and want to know more about our other stock picks?
Read: Into the Metaverse We Go
Sources – EasyResearch, City Lodge Hotels Limited, Zoom Video Communication Inc, Tietto Minerals Limited
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