Best German stocks to buy and hold as the DAX index rallies

The DAX index has done well this year as demand for European companies continued rising. The index soared to a record high of €18,571 on April 2nd. It has soared by over 21% from its lowest point in December. Its performance mirrors that of popular indices like the CAC 40 and FTSE MIB. Here are the best German stocks to buy.

The world is getting risky by the day. The war in Ukraine is continuing while the Middle East is getting more volatile. Tensions between the US and China are also escalating, raising the risk of World War 3. 

The biggest winners in all this are companies in the military-industrial complex (MIC) or the so-called defense industrial base. Rheinmetall, the biggest defense contractor in Germany has become a major beneficiary.

Its stock has jumped by over 85% this year, making it the best-performing company in the DAX index. That happened as the number of orders rose. For example, its backlog rose to over €38.3 billion in 2023 from €26.6 billion in the previous year.

There is a likelihood that the stock will continue rising in the long term as orders continue rising. The only risk is that the company has become highly overvalued as its PE ratio has jumped to over 45.

SAP is another top German stock to buy. The company provides a comprehensive suite of products that are used by companies from around the world. Its most popular solutions are its Enterprise Resource Planning (ERP), financial management, and supply chain management. It serves almost all big companies you know.

SAP’s business is doing well as companies continue boosting their investments. Its total revenue rose by 9% to €31 billion in 2023. Most of this revenue or €26.9 billion came from the cloud and software segment. 

Analysts believe that the company could continue doing well this year as the artificial intelligence trend continues. It will publish its financial results on April 22nd.

Adidas stock price has done well in the past few months. It jumped to a high of €220, its highest point since February last year. It has soared by over 135% from its lowest level last year.

Adidas shares continued the rally this week after the company boosted its guidance, meaning that it has turned the corner. It expects that its operating profit will soar to €700 million this year. This happened as its first-quarter profit jumped to €336 million.

There are signs that the company is seeing strong demand as it continues to move from the Yeezy brand. Its other collaborations with the like of Beyonce are not doing well.

Technically speaking, the stock is about to form a golden cross pattern, where the 50-day and 200-day moving averages cross each other. If it happens, there is a likelihood that the stock will jump, with the next target being at €300.

There are other notable companies to watch like Airbus, Allianz, and Mercedes Benz.

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