Hate Germany’s Soccer Team, But Love These 3 German Stocks

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Americans have good reason to hate all things German this week, as Germany stands in the way of America’s World Cup knockout-stage aspirations. But win or lose, Americans shouldn’t ignore German stocks — a who’s who of world-leading multinationals.

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Longtime soccer fans will know Germany as an ugly but crudely effective team that bludgeons likeable teams into submission. West Germany beat crowd-favorites Hungary in 1954 and the Netherlands in 1974. More modern fans know Die Mannschaft to be a more precise, finely tuned German side.

Of the 20 World Cup tournaments to date, German teams have made their way to three championships (second only to Brazil and tied with Italy), and German teams are worthy competitors every World Cup. German teams have more top-four finishes than any other country (12), while sharing the record of most top-two finishes with Brazil, with seven.

It seems that German teams exists to give the rest of the world someone to root against. Journalist and soccer historian David Winner once wrote that “A World Cup without Germany would be like Star Wars without Darth Vader.”

However, you shouldn’t let emotion get in the way of a decent trade. So, here are three globe-spanning German stocks that Americans should set their patriotic sentiments aside to buy (while continuing to root against Germany, of course).

German Stocks to Buy – Daimler AG (DDAIF)

daimler-185I’ll start with one of my very favorite German stocks, and one that I’ve recommended in Macro Trend Investor for multiple years now: premier luxury automaker Daimler AG (DDAIF).

Daimler is, of course, the maker of the iconic Mercedes-Benz luxury cars driven on the roads of every inhabited continent. But Daimler also is a leading maker of trucks, vans and buses under the Mercedes and Freightliner brands.

I might be a little partial to Daimler. It was my wining pick in InvestorPlace’s Best Stocks competition last year with total returns of 65%. (My pick in this year’s contest, South African mobile phone giant MTN Group (MTNOY) is currently in fifth place, with a little more than six months to go in the contest.)

Why do I love Daimler? I can sum it up with an offhand comment made by the “Indiana Jones of Finance,” Jim Rogers. In a road trip across six continents chronicled in his book Adventure Capitalist, a customized Mercedes was Rogers’ vehicle of choice. Why? Because “every dictator and mafioso in the world drives a Mercedes … even in countries with no roads to speak of.” Rogers knew that if he had car trouble anywhere in the world, he would be able to find a mechanic who could work on a Mercedes.

That speaks volumes about Daimler’s global presence. Daimler gets well more than a third of its sales from emerging markets, and it also has an outsized exposure to crisis-wracked Western Europe.

During the past several years, that has been a major turnoff for investors. But as both the eurozone and the developing world slowly limp into recovery, I expect it to be a major boost to Daimler’s sales.

Meanwhile, Daimler shares sell for an almost shamefully low 10 times earnings and 0.6 times sales and sport a respectable 3.2% dividend.

German Stocks to Buy – Bayerische Motoren Werke (BAMXY)

BMW BAMXYNext on the list is Daimler’s arch-rival, Bayerische Motoren Werke (BAMXY), better known by its initials: BMW.

As much as I like Daimler, I freely admit that in recent years BMW has been the brand to beat and Daimler has largely been playing a protracted game of catch-up. Year-to-date through May, BMW Group (which includes the Rolls-Royce and Mini brands as well) is having a record sales year, with sales up more than 7% from last year. The BMW brand itself is doing even better — sales are up 11% year-to-date.

Since the onset of the 2008 financial crisis, which crimped Western demand, China has been the most important growth market for luxury autos, and sales to mainland China this year are up a whopping 25%.

China’s car enthusiasts seem far less concerned than Wall Street analysts about China’s slowing economic growth. If BMW sales are any indication, then the Chinese dragon still has a lot of fire left in it.

Interestingly, sales in Spain — one of the hardest-hit eurozone crisis countries — are up a good 12% this year.

If you believe, as I do, that the global economy is slowly shaking out of its long slumber, then BMW is a fine way to play it. BMW shares trade hands for just 11 times earnings and 0.8 times sales and pay a 2.8% dividend.

German Stocks to Buy – Siemens (SIEGY)

siemenslogoAnd finally, we get to German industrial juggernaut Siemens (SIEGY), another one of my favorite German stocks with a global footprint.

Siemens is one of the world’s premier producers of industrial and power generation machinery and equipment. The company makes everything from high-speed trains to wind turbines — with German precision.

After years of austerity, European countries are starting to spend on infrastructure again. But the real news here is Siemens’ outsized exposure to emerging markets; Siemens gets about a third of its revenues from emerging-market countries.

Siemens is a little pricier than Daimler or BMW at 18 times earnings. But Siemens’ earnings are expected to jump in the coming years, giving it a more reasonable forward P/E of 15. Siemens also pays an attractive 3.1% dividend and has been raising its dividend in recent years.

Note: Siemens recently changed its U.S.-traded ADR ticker from “SI” on the NYSE to the over-the-counter “SIEGY.” See “When a Company Delists” for more.

Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor and chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long DDAIF, MTNOY and SIEGY. Click here to receive his FREE weekly e-letter covering top market insights, trends and the best stocks and ETFs to profit from today’s best global value plays.


Article printed from InvestorPlace Media, https://investorplace.com/2014/06/german-stocks-bamxy-siegy-ddaif/.

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