Metzler Capital Markets notes the following ten companies have the greatest price potential for Q1 2017: Allianz, Brenntag, Commerzbank, Deutsche Euroshop, Deutsche Telekom, Hella, Henkel, Jungheinrich, Norma Group and Siemens.
However, Metzler analyst Hendrik König recommends investors to show restraint towards shares in Aareal Bank, Comdirect Bank, Covestro, Elring Klinger and Vonovia.
König considers German companies to be in generally good shape, and the growth prospects to be solid. Backed by low unemployment and rising disposable income, domestic demand remains intact.
“But that’s about as much as we can expect”, König adds. “The valuation of the domestic equity market is relatively high at the moment, with little latitude for maneuver – even if allowance is made for the potential driving forces of the US economy.”
This is also being signaled by the consensus estimates. The Metzler analyst also sounds a note of caution concerning the forthcoming elections in key EU countries where the outcome is uncertain.
The recommendations of the Metzler analyst for the first quarter 2017 particularly favor stocks in companies with a high revenue share in the US, on interest-rate sensitive stocks as well as companies whose share prices have dipped strongly in the past and therefore signal good opportunities for exposure.
In the eurozone, the stocks of export-oriented companies in particular could profit from the new US government’s line of approach: tax reductions in the USA can be expected to trigger higher demand while the euro’s weakness against the US dollar will most likely improve the competitive position of European companies.