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Unleashing the German Stock Giants: DAX Top Performers Shine Brighter Than Big Tech
It's been a rollercoaster ride for Siemens Energy, plunging 80% following a dismal net loss of nearly 4.6 billion euros a year ago. But the Munich-based company is back on top, spearheading the DAX and propelling the overall index with its stock price more than quadrupling since the beginning of the year. This spectacular surge helped the DAX break through the 20,000-point mark for the first time, defying the ongoing sales crisis in Europe.
Siemens Energy isn't alone in its ascent. The DAX's notable performers, dubbed the "Glorious 7," have left their American tech counterparts, including Apple, Amazon, Alphabet, and Microsoft, in their dust. In fact, this year, the "Glorious 7" bagged an impressive 108% average gain, outstripping the tech giants with an equally-weighted portfolio that registered 65% growth. Even Nvidia, the undisputed king of the AI boom, faltered compared to Siemens Energy with a meager 190% increase.
But can these price gains last, or are they just a flash in the pan? According to analysts at Bloomberg, the average target for Siemens Energy is a modest 49 euros, below the current stock price. However, Berenberg analysts believe there's still untapped potential, setting a target price of 70 euros, reflecting a possible 35% upside. There are two factors influencing this optimistic view:
- Potential of the wind power division: Gamesa, the problem child that dragged Siemens Energy down, is still priced relatively low. However, a successful turnaround could value the division at up to 6 billion euros.
- Core business dynamism: Siemens Energy's core business, which includes building gas turbines and power grids, is crucial for the expansion and modernization of infrastructure. The company also supplies data centers, making it a major player in the AI wave.
Contenders in the German Tech Race
The DAX landscape is peppered with fascinating stories from other prominent stocks. Rheinmetall, a defense company, faces unique challenges, with the potential for a ceasefire in Ukraine. However, the fundamental situation remains relatively unscathed. Price setbacks could present attractive buying opportunities, despite the stock's 100% year-to-date growth.
SAP, as the largest European software company, has hitched its wagon to the digitalization megatrend. MTU Aero Engines is enjoying a weird boom due to persistent supply issues for aircraft manufacturers Airbus and Boeing, resulting in increased maintenance work for their older planes.
Fashion retailer Zalando, which struggled in the past, is making a comeback and is poised to thrive in the burgeoning online retail space. Heidelberg Materials benefits from infrastructure investments, and Deutsche Telekom's success hinges on T-Mobile US's continued strong performance.
With the "Glorious 7" securing their place as momentum stocks, another year of tremendous gains seems possible. However, it's essential to keep a watchful eye on the general market mood, especially for Siemens Energy, which might face significant setbacks during market downturns.
The 2025 Forecast: DAX at the Crossroads
The collision of two stock market worlds is evident when comparing the German stock market stars with the American tech giants. In early 2025, two significant events will occur: the US will usher in a new administration (Donald Trump) with tariff threats, and Germany will hold its federal election. A stable majority for a new government and potential economic stimulus programs could send the entire DAX soaring, making 20,000 points merely an intermediary milestone.
Stay tuned for more market insights and expert analysis as Germany's top stocks continue to rewrite the rules of investment in 2025.
Read also: Gold on the path to another record year? Here's what experts predict now
Note: Mr. Bernd Fötsch, the management and majority shareholder of Börsenmedien AG, has positions in the financial instruments mentioned in the publication or related derivatives that could benefit from price movements resulting from the publication.
- In the midst of the German stock market's stellar performance, Siemens Energy, a key player in the wind power sector, is anticipating a potential surge in value if its wind power division, currently priced relatively low, undergoes a successful turnaround.
- Aside from Siemens Energy, other prominent stocks in the DAX, such as Zalando in the online retail sector and Heidelberg Materials benefiting from infrastructure investments, are also showing promising growth prospects for the future.
