We recently compiled a list of the 10 Best German Stocks To Buy Now. In this article, we are going to take a look at where Deutsche Bank Aktiengesellschaft (NYSE:DB) stands against the other German stocks.
In Germany, the economic growth is based on industry. According to Deutschland.de, Germany’s manufacturing industry contributed 26.6% to the country’s gross value in 2021. In contrast, the percentages were 16.8% in France, 18.4% in the USA, and 29% in Japan. Moreover, in 2020, manufacturing companies generated 2,096 billion euros (approximately $2.2 trillion) in revenue. The largest contributor, at 459 billion euros ($485.3 billion), was the automotive market.
According to the aforementioned research report, the manufacturing market’s export ratio in 2021 was 48.4%. Motor cars and motor vehicle parts were Germany’s most important export products in 2022, totaling 244.4 billion euros ($258.4 billion) and accounting for 15.5% of German exports, as in previous years. In this calculation, it is the value of the finished car counts, even though many parts are imported from other countries.
As per Torsten Schrimpf, Partner and International Business Centre Director at Grant Thornton in Germany, the key growth sectors in the country at present include healthcare and medical devices, plastics, and fintech. He claims that there has been an influx of financial services companies over the past few years as a result of Brexit, with many businesses setting up entities in the country or moving away from London entirely.
Nonetheless, currently, the stock market in Germany is under a lot of strain as economic sentiment weakens. The ZEW index dropped rapidly from 13.1 in October to 7.1 in November, falling far short of the 25-point one-year average. Indicating declining confidence among financial specialists, the index measuring the state of the economy also fell by 4.5 points to -91.4. Achim Wambach, a president of ZEW, commented that Germany’s economic sentiment reflects ongoing concerns about trade and political risks, especially in light of recent events in the US. These drops mark a resurgence of worries about rising tariffs and possible trade obstacles affecting European exports in the wake of Donald Trump’s victory as president of the United States. On November 5, 2024, the German DAX index fell by 0.7% in morning trading, confirming this pessimism. The euro also dropped by 0.4% versus the US dollar to a seven-month low of about 1.06, which was made worse by estimates of a stronger dollar due to Trump’s proposed trade policies.
Following Donald Trump’s presidential victory, analysts at Citigroup and ING have voiced a cautious and pessimistic outlook for Germany’s economy. According to Citigroup analysts, Donald Trump’s victory could have a negative impact on German banks because of possible adjustments to interest rates, tariffs, and U.S. financial deregulation. ING analysts also emphasized that auto tariffs might have a “particularly hard hit” on the German economy, which is highly dependent on trade with the U.S. In light of Trump’s critical views on NATO and the Ukraine crisis, this could increase economic uncertainty and erode trust metrics. ING cautioned that while tariffs would not be implemented right away, heightened concerns about trade conflicts might force Germany and the rest of the eurozone into a recession by the end of the year.
Methodology:
To compile our list of the best German stocks to buy, we first made a list of all German firms that are trading on the NASDAQ and NYSE exchanges. Then we selected 10 stocks that had the highest upside potential. The stocks are ranked in ascending order of the upside potential, as of November 15.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
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Deutsche Bank Aktiengesellschaft (NYSE:DB)
Upside potential as of November 15: 25.68%
Deutsche Bank Aktiengesellschaft (NYSE:DB) is a global bank that operates on a universal footing. The bank provides its customers with asset management, corporate, retail, investment, and private banking services. DB ranks eighth on our list of the best German stocks.
Deutsche Bank Aktiengesellschaft (NYSE:DB) has managed to stop the negative trend of rapidly dropping revenue. The bank has downscaled its fixed-income trading business, sold off its worldwide equity sales and trading division, and significantly cut staff in the process. The bank now concentrates on its core basics, offering corporate banking, private banking, investment banking, and asset management services to its customers worldwide.
The third quarter of 2024 net revenues of €7.5 billion ($7.94 billion) represented a 5% growth YoY. This resulted from commissions and fee income, which increased 5% annually to €2.5 billion ($2.64 billion), showing the successful operation of fee- and commission-based enterprises. The third quarter of 2024 was also driven by the investment bank’s strong performance. Its net sales increased by 11% to €2.5 billion ($2.64 billion) in the third quarter of 2023, fueled by increases in both Origination & Advisory and Fixed Income and Currencies (FIC). Additionally, the business’s operating business achieved a record-breaking third-quarter profit.
The operational strength of Deutsche Bank Aktiengesellschaft (NYSE:DB) is proven by its nine-month 2024 results. Both revenue growth and expense control were regularly met by the company; the capital and balance sheet are sound, and the overall quality of the loan book is still strong. The management is confident that it will reach its revenue guidance of €30 billion ($31.7 billion) for 2024 and that it will accomplish its 2025 targets due to its steady revenue growth, cost reductions, capital strength, and lowering credit provisions.
Overall DB ranks 8th on our list of the best German stocks to buy. While we acknowledge the potential of DB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.