Germany’s economy, historically the powerhouse of Europe, is going through a rough patch. Its reliance on Russian energy and trade with China will have to be scaled back and new sources of growth found. Investment will be needed and it will take time. As a result, the country’s stock market has markedly trailed the U.S.’s, climbing 8.7% against the S&P 500 ‘s 14%.
“The energy transition, along with the lack of another strong export market which is able to absorb all Germany’s products, has put its entire business model at risk,” said Carsten Brezski, an economist at ING in Frankfurt. Given these challenges, one strategy for investors would be to look for companies that have been bearing the brunt of them, in the hope that they will pull out of the slump stronger.
Another one might be steel maker Thyssenkrupp . It’s down 4% over the past three months, trading at $7.22 compared with more than $14 in March 2021. To be fair, it’s trading more than 50% higher than it was 12 months ago, but that also highlights its volatility. The company trades at 16 times forward earnings, putting it at a 10% discount to peers.