While Germany’s economy may have shrank by 5% during the coronavirus pandemic and subsequent lockdown measures in 2020, it remains a true economic behemoth that continues to be powered by industry and manufacturing.
In fact, Germany is currently ranked as the fourth largest economy in the world, with a nominal GDP in excess of $3.693 trillion and an annualised growth rate of 2.22% (without factoring in the anomaly of Covid-19, of course).
As a largely industrial economy, Germany is also home to numerous stocks and indices that offer genuine value to investors in the current climate. But which are the best options, and why should we trade stocks through contracts for difference (CFDs)?
Trading Stocks with CFDs – What are the Advantages?
If you are going to trade German stocks in the current climate (where short and medium-term volatility will continue to grip the economy), CFDs may well offer the best type of investment vehicle.
By trading stocks and indices through licensed CFDs, you can speculate on whether or not the value of a targeted stock or group of stocks will rise or fall, rather than having to assume ownership of the underlying financial instrument.
This is because a CFD is a financial contract that simply pays any differences in the settlement price between open and closing trades, with this type of vehicle available across a range of asset classes.
This undoubtedly enables you to profit even in a depreciating market, while leveraging sustained volatility and benefit from all types of price movement in real-time.
Interestingly, you can also trade lucrative German indices such as the DAX through CFDs, which tracks the 30 largest and most traded native shares listed on the Frankfurt stock exchange.
Three of the Best German Stocks
At this stage, we need to identify three of the best German stocks on the market, particularly from the perspective of long-term growth and their ability to remain robust in the face of wider economic volatility. Here’s our top three:
Not only is SAP Germany’s most valuable technology company, but it’s also the single most lucrative in Europe.
Make no mistake; the ERP leader declared a solid set of results for Q4, 2019 (prior to the coronavirus), with Cloud revenue jumping by 39% to €6.934 million and total income increasing by 12% to €27,553 million.
With in-demand Cloud and software-based services likely to drive this company’s short and medium-term growth, SAP looks like a solid bet for 2021 and beyond. This rule will even apply in the event of an economic recovery, with worldwide growth likely to peak at 5.5% this year.
Linde is another market leading stock, and one that’s considered to be the largest natural gas supplier in the world.
This company, which was formed by the merger of Linde AG of Germany and Praxair of the United States, is the dominant firm by both market share and revenue, while its segmentation of gas and engineering and materials handling creates two sizable revenue streams.
The firm clocked sales of $28 billion in 2019, while its share price was also underpinned by an operating cash flow of $6.12 billion.
No list of this type would be complete without the inclusion of Allianz, which is based in Germany but classed as a multinational, European financial services firm that’s renowned across the globe.
A true financial and insurance giant, Allianz provides products and services to more than 100 million customers in more than 70 countries, with investors attracted to its blue chip status and capacity to deliver incremental dividend payouts over an extended period of time.
Arguably, Allianz could offer increased value to investors in the longer-term, especially if Germany is successful in claiming a larger share of the world’s lucrative financial services market post-Brexit.