In this article, we will look at 10 best German stocks to buy now. If you want to explore more German stocks, you can also take a look at 5 Best German Stocks to Buy Now.
Germany is the largest economy in Europe by gross domestic product, followed by the United Kingdom, France, Italy, and Russia. Germany recorded an annual GDP of $4.22 trillion in 2021, which represents approximately 4.4% of the world’s GDP of $96.1 trillion in 2021. Germany recorded year-over-year GDP growth of 7.5% in 2021 but as we entered into 2022, the economy was met with supply chain challenges, inflation, and an energy crisis among other macro pressures.
Russia Cutting Off Gas Supply to Germany
For decades Germany has relied on Russia for oil and natural gas to heat its homes and fuel its industries. On July 25, it was reported that Russia will further cut gas supplies to Germany through Nord Stream 1 because of sanctions and a turbine problem. This cut reduced gas supply to Germany by one-fifth of the pipeline’s capacity. Meanwhile, the European Union announced that member states have agreed to cut gas demand by 15% in order to reduce their reliance on Russia.
Inflation In Germany
Inflation in Germany has started to decline. According to data from Germany’s Federal Statistics Office, the CPI in Germany was reported at 7.6% in June, down from 7.9% in May 2022. For July, the Federal Statistics Office of Germany expects the consumer price index to fall to 7.5% year over year, registering the second consecutive decline. In June the energy index dipped to 38%, from 38.3% in May, and is forecasted to record a reading of 35.7% for July. While energy spending is declining, the food index is rising. The food index rose to 12.7% in June from 11.1% in May and is expected to record a reading of 14.8% for July.
Investing in German Stocks
While the German economy is faced with macro pressures, it is still the largest economy in Europe and home to some of the industry-leading companies that export products all over the world. Germany is renowned for manufacturing some of the most luxurious automobiles and top-quality electronic products. Investors looking to diversify their portfolios can explore these companies that have promising fundamentals and massive growth potential.
German automakers and their American counterparts plan to abandon internal combustion engines and launch all-electric battery vehicles in Europe by 2030. Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F) are all racing to Europe to dominate the EV space.
To determine the 10 best German stocks to buy now, we reviewed major companies in Germany that have operations worldwide. We included names from the country’s top performing sectors which include automobiles, electronics, chemicals, and services. Along with each stock, we have mentioned the market sentiment around it.
Best German Stocks to Buy Now
10. Allianz SE (OTC:ALIZY)
Allianz SE (OTC:ALIZY) provides property-casualty insurance, life/health insurance, and asset management products and services worldwide. The company is one of the largest asset managers in the world with roughly EUR 2.5 trillion in assets under management. As of 2022, Allianz SE (OTC:ALIZY) serves 126 million customers in more than 70 countries worldwide. Allianz SE (OTC:ALIZY) was founded in 1890 and is headquartered in Munich, Germany.
Another reason why Allianz SE (OTC:ALIZY) is a compelling stock option right now is its dividend yield and valuation. As of August 3, Allianz SE (OTC:ALIZY) has a forward dividend yield of 6.22% and a trailing twelve-month PE ratio of 16.01.
Wall Street is bullish on Allianz SE (OTC:ALIZY). On June 7, Barclays analyst Claudia Gaspari revised her price target on Allianz SE (OTC:ALIZY) to EUR 225 from EUR 230 and reiterated an Equal Weight rating on the shares. On July 21, Deutsche Bank analyst Hadley Cohen maintained his Buy rating on Allianz SE (OTC:ALIZY) after adjusting his price target on the stock to EUR 245 from EUR 250.
9. Volkswagen AG (OTC:VWAGY)
Volkswagen AG (OTC:VWAGY) manufactures and sells automobiles in Europe, North America, South America, and the Asia-Pacific. The company operates in four segments: Passenger Cars and Light Commercial Vehicles, Commercial Vehicles, Power Engineering, and Financial Services. Volkswagen AG (OTC:VWAGY) is most widely known for its brands of exotic and hyper cars which include Audi, Bentley, Porsche, Lamborghini, and Bugatti.
While discretionary spending is expected to decline in an economic downturn, Volkswagen AG (OTC:VWAGY) has solid free cash flows to weather a recession. The stock is also trading at a bargain right now. As of August 3, Volkswagen AG (OTC:VWAGY) has a trailing twelve-month PE ratio of 5.49 and is offering a forward dividend yield of 3.98%, which it supports with free cash flows of EUR 20.26 billion.
Wall Street is bullish on Volkswagen AG (OTC:VWAGY). On July 7, UBS analyst Patrick Hummel trimmed his price target on Volkswagen AG (OTC:VWAGY) to EUR 230 from EUR 280 but reiterated a Buy rating on the shares. On August 1, RBC Capital analyst Tom Narayan raised his price target on Volkswagen AG (OTC:VWAGY) to EUR 316 from EUR 310 and reiterated a buy-side Outperform rating on the shares.
Like its American rivals Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F), Volkswagen AG (OTC:VWAGY) is taking a beating in 2022 and as of August 3 has lost more than 30% of its value year to date.
8. Siemens AG (OTC:SIEGY)
Siemens AG (OTC:SIEGY) is a leading German technology company that focuses on the areas of automation and digitalization in Europe, the Commonwealth of Independent States, Africa, the Middle East, the Americas, Asia, and Australia. The company operates through the following segments: Digital Industries, Smart Infrastructure, Mobility, Siemens Healthineers, and Siemens Financial Services segments. The company has been in business for over 150 years and has grown to become Europe’s largest industrial manufacturing company.
Siemens AG (OTC:SIEGY) is committed to expanding its operations and driving innovation. On June 27, the company announced that it has signed an agreement to acquire Brightly Software, a U.S.-based software-as-a-service provider of asset and maintenance management solutions, for $1.575 billion. With this acquisition, Siemens AG (OTC:SIEGY) aims to extend Brightly’s cloud platform across key sectors including education, public infrastructure, healthcare, and manufacturing, and accelerate the growth of its SaaS business.
On June 29, Siemens AG (OTC:SIEGY) announced that it has expanded its partnership for industrial automation with NVIDIA Corporation (NASDAQ:NVDA). Siemens AG (OTC:SIEGY) plans to connect its Xcelerator platform with NVIDIA Corporation’s (NASDAQ:NVDA) Omniverse to enable industrial applications of digital twins and the metaverse. NVIDIA Corporation (NASDAQ:NVDA) believes that its AI capabilities paired with Siemens AG’s (OTC:SIEGY) expertise in mechanical and electrical engineering will enable both companies to drive industrial automation and the digital transformation of businesses worldwide.
Wall Street is bullish on Siemens AG (OTC:SIEGY). On June 15, Deutsche Bank analyst Gael de-Bray revised his price target on Siemens AG (OTC:SIEGY) to EUR 160 from EUR 170 and reiterated a Buy rating on the shares. On July 14, Morgan Stanley analyst Ben Uglow reiterated his Overweight rating on Siemens AG (OTC:SIEGY) and adjusted his price target to EUR 145 from EUR 155.
7. BASF SE (OTC:BASFY)
BASF SE (OTC:BASFY) operates as a chemical company worldwide. The company operates through six segments: Chemicals, Materials, Industrial Solutions, Surface Technologies, Nutrition & Care, and Agricultural Solutions. BASF SE (OTC:BAFSY) was founded in 1865 and is headquartered in Ludwigshafen am Rhein, Germany. On July 27, the company reported earnings for the fiscal second quarter of 2022. BASF SE (OTC:BASFY) reported earnings per share of EUR 2.31 and generated a revenue of EUR 22.97 billion for the quarter, up 16.3% year over year.
On August 3, BASF SE (OTC:BASFY) announced that it has signed virtual power purchase agreements for 250 megawatts of wind and solar power. With these agreements, BASF SE (OTC:BASFY) will be able to balance the electricity being consumed at more than 20 of its manufacturing sites across the United States. In total, BASF SE (OTC:BASFY) has signed to purchase over 660,000 megawatt-hours of electricity per year and believes that with this investment, the company can reduce its greenhouse gas emissions by 25% by 2030 and achieve net-zero emissions by 2050.
BASF SE (OTC:BASFY) is an undervalued dividend-paying German company. As of August 3, the stock has a trailing twelve-month PE ratio of 7.25 and is offering a forward dividend yield of 8.07%, which the company backs with free cash flows of EUR 2.36 billion.
Wall Street analysts are positive on BASF SE (OTC:BASFY). On July 29, Morgan Stanley analyst Charles Webb revised his price target on BASF SE (OTC:BASFY) to EUR 59 from EUR 62 and reiterated an Equal Weight rating on the shares. On August 2, Deutsche Bank analyst Tim Jones adjusted his price target on BASF SE (OTC:BASFY) to EUR 55 from EUR 60 and maintained a Hold rating on the shares.
6. BMW (OTC:BMWYY)
BMW (OTC:BMWYY) is another leading German automaker that is well known for its luxurious fleet of passenger vehicles. The company’s most famous brands are BMW, MINI, and Rolls-Royce. BMW (OTC:BMWYY) has provided premium quality vehicles to consumers for over 200 years now and has an established business. On August 3, BMW (OTC:BMWYY) announced earnings for the fiscal second quarter of 2022. The company reported earnings per share of EUR 4.30 and revenue of EUR 34.77 billion, up 21.7% year over year.
On May 17, Bernstein analyst Daniel Roeska initiated coverage of BMW (OTC:BMWYY) with an Outperform rating and a EUR 100 price target. The analyst likes premium names that hold pricing power and sees premium European automakers meeting their guidance in 2022 but also sees a risk of weakening demand in 2023.
BMW (OTC:BMWYY) is attractively valued and is offering a strong dividend. As of August 3, BMW (OTC:BMWYY) has a trailing twelve-month PE ratio of 2.56 and is offering a forward dividend yield of 7.37%, which the company supports with free cash flows of $8.13 billion.
BMW (OTC:BMWYY) is among the automakers that are focusing on a sustainable future. The company aims for EVs to account for 50% of its global vehicle sales by 2030. On June 28, BMW (OTC:BMWYY) announced that it is partnering with Valeo (OTC:VLEEY) to provide advanced driver assistance systems for BMW’s (OTC:BMWYY) EV platform, which is expected to launch in 2025.
BMW (OTC:BMWYY) plans to lead the EV space in Europe and is going neck and neck with Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F).
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Disclosure: None. 10 Best German Stocks to Buy Now is originally published on Insider Monkey.