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 Jumia Technologies AG (NYSE:JMIA) 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)
A woman in fashionable apparel shopping on an e-commerce platform.
Jumia Technologies AG (NYSE:JMIA)
Upside potential as of November 15: 75.54%
Jumia Technologies AG (NYSE:JMIA) is a pan-African e-commerce platform. The company’s platform comprises a marketplace, which links sellers with consumers. Its logistics service makes it possible for merchants to ship and deliver items to customers, and its payment service makes it easier for users in certain marketplaces to deal with one another.
Jumia Technologies AG (NYSE:JMIA) generates revenue through marketing and advertising, value-added services, commissions, fulfillment, and product sales. West Africa, North Africa, East and South Africa, Europe, and the United Arab Emirates are its geographical divisions. The West Africa segment accounts for the majority of the company’s revenue.
Jumia Technologies AG’s (NYSE:JMIA) Q3 2024 results were mixed, showing growth in GMV and active customers but also higher cash usage and EBITDA loss as a result of strategic expenditures. Despite the short-term cost increases caused by warehouse consolidation and higher marketing expenditures, efficiency and growth are anticipated in 2025. Expansion beyond major cities in Nigeria is encouraging, with upcountry orders growing 22% YoY, highlighting the company’s resilience in tough economic conditions.
2025 is a crucial “prove it” year for Jumia Technologies AG (NYSE:JMIA) because of its solid cash position and strategic foundation, even in the face of recent stock declines.
RBC Capital started covering Jumia Technologies AG (NYSE:JMIA) on November 13, 2024, with a $5 price target. In a research note, the analyst informed investors that Jumia is the biggest pan-Africa e-commerce vendor, offering an appealing combination of an underserved end market with a well-known brand, asset-light vertical integration, and a developing moat with possible longer-term possibilities.
Overall JMIA ranks 5th on our list of the best German stocks to buy. While we acknowledge the potential of JMIA 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 JMIA 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.