In this article, we discuss the 10 best German stocks to buy now.
Germany is the biggest economy of Europe with 2020 gross domestic product (GDP) of $3.9 trillion and holds a 4.4% share of the global economy. The country also suffered in the face of the global economic clampdown in 2020 due to the novel Covid-19, where its GDP fell by 5% in 2020, as reported by Destatis. However, this loss was considered the least in Europe when compared with Germany’s peers, as the GDP of both Italy and France dropped by 9% in 2020 and the UK reported the worst performance in 300 years, with its economy crashing by 11%.
According to a report by Wall Street Journal, similar is the case with the German stock market as German stocks outperformed their European peers in 2020. Dax Performance Index, which lists 30 German major blue-chip companies, soared 18.50% in the past year when compared with the UK’s FTSE 100 Index, which gained 16.1% during the same period. DAX 30, which lists famous German stocks such as Linde plc (NYSE:LIN), SAP SE (NYSE:SAP), Siemens Aktiengesellschaft (OTCMKTS:SIEGY), Volkswagen AG (ETR:VOW3.DE), and Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW.DE), delivered a 14.02% return in 2021, compared with a 7.83% year to date return of Spain’s Ibex 35.
To provide a more extensive outlook of Germany’s most profitable businesses, Deutsche Börse, a market place organizer for the trading of shares, has announced the expansion of DAX 30 to DAX 40. In this recent development, Dax 30, Germany’s benchmark stock index, will incorporate 10 more largest German companies by market cap, switching the index to DAX 40. As Bloomberg reported, according to JPMorgan Chase & Co., the included companies will exhibit faster growth and value, such as Zalando SE, Hello Fresh SE, Airbus SE, and Siemens Healthineers AG. Moreover, the supplementary companies will add $416 billion to the index’s market value. According to DWS Group, the changes in DAX 30 are made to diversify the index by adding e-commerce and medical technology sectors as well as to gain the attention of international investors.
According to Morgan Stanley, in times of financial uncertainty, investors should look for European stocks, as they have managed to surpass their U.S. counterparts in 2021. This seems viable as the pan-European Stoxx 600 index is up 16.06% in 2021, compared with the Dow Jones Industrial Average’s return of 14.9% in the same time frame. Dow Jones Industrial Average lists some of the most prominent companies on the U.S. stock exchanges, such as The Coca-Cola Company (NYSE:KO), Apple Inc., Johnson & Johnson (NYSE:JNJ), and The Goldman Sachs Group, Inc. (NYSE:GS). The analysts believe that the positive economic impetus in Europe could continue in 2022 as well due to its rapid economic recovery, fueled by stimulus coverage.
Our Methodology:
Let’s analyze the list of the 10 best German stocks to buy now. The stocks mentioned below in the list are the German companies with future growth potential. In addition to this, we took into account hedge fund sentiments, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks.
Why pay attention to hedge fund sentiment while choosing stocks?
Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETF. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best German Stocks to Buy Now
10. Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW.DE)
Number of Hedge Fund Holders: N/A
Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW.DE), commonly known as BMW, is a German manufacturer of luxury cars and motorcycles. The company has headquarters in Munich, Germany, and ranks tenth on our list of the best German stocks to buy now.
In Q2 2021, Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW.DE) reported revenue of €25.5 billion, showcasing a 28.1% year-over-year growth. In the second quarter, the company sold 702,441 units, a 44.7% increase from the prior-year quarter. Moreover, in the first half of 2021, Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW.DE) delivered 1,339,047 BMWs and Rolls-Royce brand vehicles, up 40% from the previous year. Due to solid Q2 earnings, Societe Generale lifted its price target on Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW.DE) to €115, while keeping a ‘Buy’ rating on the shares.
9. Siemens Aktiengesellschaft (OTCMKTS:SIEGY)
Number of Hedge Fund Holders: 3
Siemens Aktiengesellschaft (OTCMKTS:SIEGY) ranks ninth on our list of the best German stocks to buy now. It is a German technology company, focused on industry, transport, infrastructure, and healthcare. The company aims to achieve cleaner and more comfortable transportation and advanced healthcare by using technology efficiently.
Recently, Siemens Aktiengesellschaft (OTCMKTS:SIEGY) has announced plans to expand its U.S. operations by manufacturing over 1 million electric vehicle charges for the country by 2025. For this purpose, the company is also looking for a new facility, which will mark its third eMobility hub in the U.S. In Q3 2021, Siemens Aktiengesellschaft (OTCMKTS:SIEGY) posted revenue of €16.1 billion, up from €12.9 billion from the prior-year quarter, presenting a 24% year-over-year growth. Due to the strong results, the company also raised its full-year 2021 guidance, and now expects net income in between the range of €6.1 billion to €6.4 billion. In August, Morgan Stanley lifted its price target on Siemens Aktiengesellschaft (OTCMKTS:SIEGY) to €160, while keeping an ‘Equal Weight’ rating on the shares.
With over 13.4 million shares, worth $1.06 billion, Ken Fisher’s Fisher Asset Management is the company’s largest shareholder. As of Q2 2021, 3 hedge funds tracked by Insider Monkey have positions in Siemens Aktiengesellschaft (OTCMKTS:SIEGY), worth over $1.07 billion.
In addition to Linde plc (NYSE:LIN), The Coca-Cola Company (NYSE:KO), BioNTech SE (NASDAQ:BNTX), Apple Inc. (NASDAQ:APPL), Deutsche Bank Aktiengesellschaft (NYSE:DB), SAP SE (NYSE:SAP), Johnson & Johnson (NYSE:JNJ), and The Goldman Sachs Group, Inc. (NYSE:GS), investors and analysts are also paying attention to Siemens Aktiengesellschaft (OTCMKTS:SIEGY) amid the company’s long-term growth potential.
8. Spark Networks SE (NYSE:LOV)
Number of Hedge Fund Holders: 6
Spark Networks SE (NYSE:LOV) ranks eighth on our list of the best German stocks to buy now. It is a legal global dating company with headquarters in Berlin, Germany. The company provides a widening portfolio of premium & free apps for its consumers globally.
In Q2 2021, Spark Networks SE (NYSE:LOV) announced growth in Monthly Average Revenue Per User at $20.96, compared with $20.81 during the same period last year. Spark Networks SE (NYSE:LOV) reported revenue of $55.3 million in Q2 and expects full-year 2021 revenue in the range of $219 million to $223 million. In August, B. Riley kept a ‘Buy’ rating on Spark Networks SE (NYSE:LOV), with a $5 price target. The firm’s analyst sees potential in engagement rates and paying subscribers at Zoosk, one of the company’s online dating brands.
Of the 873 hedge funds tracked by Insider Monkey, 6 hedge funds have positions in Spark Networks SE (NYSE:LOV), worth over $32 million. The number of hedge funds having stakes in the company remained the same in the previous quarter. With over 3.7 million shares, worth $19.2 million, Osmium Partners is the company’s leading shareholder.
Like Linde plc (NYSE:LIN), The Coca-Cola Company (NYSE:KO), BioNTech SE (NASDAQ:BNTX), Apple Inc. (NASDAQ:APPL), Deutsche Bank Aktiengesellschaft (NYSE:DB), SAP SE (NYSE:SAP), Johnson & Johnson (NYSE:JNJ), and The Goldman Sachs Group, Inc. (NYSE:GS), Spark Networks SE (NYSE:LOV) is one of the most notable stocks gaining investors’ attention in 2021.
7. MERCK Kommanditgesellschaft auf Aktien (ETR:MRK.DE)
Number of Hedge Fund Holders: N/A
MERCK Kommanditgesellschaft auf Aktien (ETR:MRK.DE), or commonly known as Merck, is a German science and technology company that deals in advanced gene-editing technologies and also manufactures therapies to treat various challenging diseases. The company stands seventh on our list of the best German stocks to buy now.
In Q2 2021, MERCK Kommanditgesellschaft auf Aktien (ETR:MRK.DE) posted an EPS of €2.24, beating the estimates by €0.08. The company’s revenue also presented an 18.2% year-over-year growth at €4.87 billion. Due to strong quarterly earnings, MERCK Kommanditgesellschaft auf Aktien (ETR:MRK.DE) raised its FY21 outlook, and now expects net sales of between €18.8 billion and €19.7 billion. In September, JPMorgan and Barclays reiterated an ‘Overweight’ and an ‘Equal Weight’ rating on MERCK Kommanditgesellschaft auf Aktien (ETR:MRK.DE), respectively.
In addition to Linde plc (NYSE:LIN), The Coca-Cola Company (NYSE:KO), BioNTech SE (NASDAQ:BNTX), Apple Inc. (NASDAQ:APPL), Deutsche Bank Aktiengesellschaft (NYSE:DB), SAP SE (NYSE:SAP), Johnson & Johnson (NYSE:JNJ), and The Goldman Sachs Group, Inc. (NYSE:GS), investors and analysts are also paying attention to MERCK Kommanditgesellschaft auf Aktien (ETR:MRK.DE) amid the company’s long-term growth potential.
6. CureVac N.V. (NASDAQ:CVAC)
Number of Hedge Fund Holders: 12
CureVac N.V. (NASDAQ:CVAC) is a German biotechnology company that develops therapies based on messenger RNA. It is one of the very first companies to use mRNA technology for medical purposes. CureVac N.V. (NASDAQ:CVAC) ranks sixth on our list of the best German stocks to buy now.
Recently, CureVac N.V. (NASDAQ:CVAC) provided the initial preclinical data demonstrating the medical capability of mRNA in the treatment of liver fibrosis. In Q2 2021, CureVac N.V. (NASDAQ:CVAC) posted revenue of €22.4 million and has cash and cash equivalents of €1.36 billion, compared with €1.32 billion as of December 2020. Though the company has slashed its further Covid-19 vaccine production plans, its second-generation vaccine proved its efficacy in immune responses. In July, Berenberg Bank set its price target on CureVac N.V. (NASDAQ:CVAC) at $123, with a ‘Buy’ rating on the shares.
As of Q2 2021, 12 hedge funds tracked by Insider Monkey have positions in CureVac N.V. (NASDAQ:CVAC), up from 9 in the previous quarter. The total value of these stakes is $24.9 million.
5. Volkswagen AG (ETR:VOW3.DE)
Number of Hedge Fund Holders: N/A
Volkswagen AG (ETR:VOW3.DE) ranks fifth on our list of the best German stocks to buy now. It is a German automotive corporation that is best known for making passenger vehicles. The company was founded in 1937 and expanded its production in the 1950s by introducing the Transporter van.
In Q2 2021, Volkswagen AG (ETR:VOW3.DE) posted revenue of €67.29 billion, showcasing 63.8% year-over-year growth. The company’s global vehicle deliveries grew by 27.9% at 5 million in Q2, which was previously impacted by Covid-19. In its financial report, Volkswagen AG (ETR:VOW3.DE) also reported an 8.8% operating return on sales in the first six months of 2021 and expects the figure to reach 6.0% to 7.5% by the end of the year. In August, Barclays lifted its price target on Volkswagen AG (ETR:VOW3.DE) to €295, while keeping an ‘Overweight’ rating on the shares.
4. SAP SE (NYSE:SAP)
Number of Hedge Fund Holders: 17
SAP SE (NYSE:SAP) is a German software company that develops software solutions used by both small and large corporations. With the help of the company’s software, different organizations of all sizes run their businesses profitably. SAP SE (NYSE:SAP) stands fourth on our list of the best German stocks to buy now.
In August, Oppenheimer assumed its coverage on SAP SE (NYSE:SAP) with an ‘Outperform’ rating and a $155 price target. The firm’s analyst, Ray McDonough sees the opportunity in the company’s services segment and expects the company to carry out multiple expansions in the segment. In Q2 2021, SAP SE (NYSE:SAP) posted an EPS of €1.75, beating the estimates by €0.58. The company also reported an 11% year-over-year growth in cloud revenue at €2.28 billion. SAP SE (NYSE:SAP) gained 17.15% in the past six months and 11.2% year to date.
With 8.8 million shares, worth $1.2 billion, Ken Fisher’s Fisher Asset Management is the company’s largest shareholder. As of Q2 2021, 17 hedge funds tracked by Insider Monkey have positions in SAP SE (NYSE:SAP), worth over $1.6 billion. In the first quarter, 19 hedge funds held stakes in the company, with a total value of $1.47 billion.
Polen Capital, an investment management firm, published its second-quarter 2021 investor letter and mentioned SAP SE (NYSE:SAP) in it. Here is what the firm has to say:
“During the second quarter, the leading absolute contributors to performance (includes) SAP. German enterprise software company SAP was a leading contributor to Portfolio returns in the quarter. Over the last six months, SAP rolled out a new simplified commercial offering aimed at making it easier for their customers to transition their core enterprise resource planning software to the cloud. “Rise with SAP” will encourage customers to consider moving certain workloads to new cloudenabled software. In many cases, SAP customers standardized business processes on SAP software over decades. Contemplating and enacting transformational change is a huge undertaking for these customers. Historically, transitioning to the cloud involves many third-party helpers, so having a single, trusted partner to lead the conversation, design the road map, and own the execution is helpful. Further, as customers shift to the cloud, more peripheral workloads can be handled by SAP, thereby potentially increasing the scale of its relationship with certain customers. Not all legacy customers will adopt SAP’s cloud software, but there could be meaningful performance benefits (quicker innovation, more agility, and mobility, etc.) and cost savings for those that do.
In addition, new customers are coming aboard the SAP cloud platform, which we view as a testament to its leading capabilities. This initiative could drive cloud software revenue growth greater than 20% in the coming years, some of which will cannibalize existing onpremise software sales. That said, the potential net result is attractive and durable growth. We think SAP is capable of doubledigit earnings growth over the coming five-year period.”
3. Deutsche Bank Aktiengesellschaft (NYSE:DB)
Number of Hedge Fund Holders: 20
Deutsche Bank Aktiengesellschaft (NYSE:DB) is a German multinational investment bank and financial services company. The bank derives its strength by focusing on financing, advisory, fixed income, and currencies. Deutsche Bank Aktiengesellschaft (NYSE:DB) ranks third on our list of the best German stocks to buy now.
Recently, Moody’s Investors Services, a credit rating company, upgraded Deutsche Bank Aktiengesellschaft’s (NYSE:DB) outlook to positive due to the bank’s progress towards its medium-term targets. In Q2 2021, Deutsche Bank Aktiengesellschaft (NYSE:DB) reported revenue of €6.24 billion, beating the estimates by €310 million. The company reported year-over-year growth across all of its segments and expects FY21 revenue to be ahead of its guidance. In August, Keefe Bruyette upgraded Deutsche Bank Aktiengesellschaft (NYSE:DB) to ‘Market Perform’ with a €13 price target, up from €12. Since the beginning of the year, Deutsche Bank Aktiengesellschaft (NYSE:DB) delivered a 21.28% return to shareholders, while the stocks gained 43.1% in the past year.
As of Q2 2021, 20 hedge funds tracked by Insider Monkey have positions in Deutsche Bank Aktiengesellschaft (NYSE:DB), worth $1.86 billion. In the previous quarter, 16 hedge funds held stakes in the company, valued at over $1.7 billion. Hudson Executive Capital is the company’s leading shareholder with 67.3 million shares, worth $877.9 million.
2. BioNTech SE (NASDAQ:BNTX)
Number of Hedge Fund Holders: 20
BioNTech SE (NASDAQ:BNTX) is a German biotechnology company that develops and manufactures novel therapies for cancer and other serious diseases. The company utilizes advanced technological discoveries and therapeutic drug platforms for the rapid development of novel biopharmaceuticals. BioNTech SE (NASDAQ:BNTX) stands second on our list of the best German stocks to buy now.
In August, UBS lifted its price target on BioNTech SE (NASDAQ:BNTX) to $300 from $111 and named the company as a crucial player in the Covid-19 vaccine space. The firm’s analyst, Eliana Merle noted that the company could benefit from continued boosted shots. In Q2 2021, BioNTech SE (NASDAQ:BNTX) posted revenue of €5.3 billion, up from €41.7 million during the same period last year. The company also reported estimated vaccine revenue of €15.9 billion of 2.2 billion signed supply contracts of Covid-19 vaccine doses. BioNTech SE (NASDAQ:BNTX) targets the manufacturing capacity of 3 billion to 4 billion doses of Covid-19 vaccines for the year 2022. BioNTech SE (NASDAQ:BNTX) jumped from $66.6 in September 2020 to $346.9 in September 2021, gaining 418.4% in the past year.
As of Q2 2021, 20 hedge funds tracked by Insider Monkey have positions in BioNTech SE (NASDAQ:BNTX), up from 18 in the previous quarter. The total value of these stakes is $579.1 million. With over 1.2 million shares, worth $276.7 million, Coatue Management is the company’s leading shareholder.
Artisan Partners recently released its Q2 2021 investor letter and mentioned BioNTech SE (NASDAQ:BNTX) in it. Here is what the firm has to say:
“Among our top contributors as BioNTech. Shares of BioNTech doubled in Q2 as the scientific and commercial success of the company’s highly effective COVID-19 mRNA vaccine came into sharper focus. The emergence of mRNA vaccines—which instruct cells to make a protein to trigger an immune response instead of putting a weakened or inactivated germ into our bodies—from BioNTech, Pfizer and Moderna have proven instrumental in combatting the COVID-19 pandemic. The companies’ compelling clinical data have made mRNA vaccines the preferred shots globally, prompting BioNTech and its partner Pfizer to expand manufacturing capacity rapidly to keep up with demand. The company now expects to be able to supply up to three billion doses in 2021, a remarkable achievement.
While we have long admired BioNTech’s management, technology platform and deep pipeline of novel cancer therapies, the dramatic stock price increase in Q2 causes some challenges. On one hand, the company is now in an incredibly strong financial position—profits from COVID-19 vaccines will likely give BioNTech massive cash reserves with which to invest aggressively in the broader potential of mRNA therapeutics. On the other hand, we can expect COVID-19 sales to decline sharply longer term, though the shape of this curve is up for debate based on how often booster shots will be needed. We are being prudent in our effort to appraise and value the windfall of profits over the intermediate term while balancing the potential for declining profits for several years post-pandemic (even if the company’s cancer pipeline progresses nicely). We have trimmed our position size to manage this risk accordingly.”
1. Linde plc (NYSE:LIN)
Number of Hedge Fund Holders: 55
Linde plc (NYSE:LIN) tops our list of the best German stocks to buy now. It is a global multinational industrial gases and engineering company that has been utilizing the power of hydrogen for over 100 years. Linde plc (NYSE:LIN) is the global leader in the production, processing, and distribution of hydrogen.
Recently, Linde plc (NYSE:LIN) announced the expansion of its production capacity in Florida, U.S. to meet the demand for industrial gases. The project is expected to be completed in 2023. In Q2 2021, Linde plc (NYSE:LIN) posted an EPS of $2.70, beating the consensus by $0.17. The company reported revenue of $7.6 billion, presenting a 19.1% year-over-year growth. After solid quarterly earnings, Linde plc (NYSE:LIN) raised its full-year 2021 guidance and now expects adjusted EPS between $10.10 and $10.30 versus estimates of $10.04. In August, JPMorgan and Wells Fargo lifted their price targets on Linde plc (NYSE:LIN) to $356 and $360, respectively. Both the firms keep an ‘Overweight’ rating on the company’s shares. Since the beginning of the year, Linde plc (NYSE:LIN) delivered a 20.7% return to shareholders, while its 12-month returns came in at 24.6%.
Of the 873 hedge funds tracked by Insider Monkey, 55 hedge funds have positions in Linde plc (NYSE:LIN), worth over $5.9 billion. In Q1 2021, 43 hedge funds had positions in the company, with a total value of $4.63 billion.
You can also take a look at 10 Best Undervalued Dividend Stocks to Buy Now and 10 Stocks that Released Solid Quarterly Earnings
Follow Insider Monkey on Twitter
Suggested articles:
- 20 largest European Companies by Market Cap
- 14 Best European Dividend Stocks To Buy
- 10 Best European Bank Stocks to Buy Now
Disclosure. None. 10 Best German Stocks to Buy Now is originally published on Insider Monkey.
