The shares of luxury carmakers are riding high on the stock market at the moment – in the truest sense of the word. Ferrari stock has risen to USD 329 this year, marking a new all-time high. When it was listed in New York in 2015, each share cost only USD 52. This year alone the share price with the ticker symbol “RACE” has appreciated more than 40%. Porsche has still risen in price by almost a fifth since New Year’s Eve, while Mercedes-Benz is just behind it at 17%. All three stocks performed much better in 2023 than the market as a whole, then. If the analysts at UBS are to be believed, they have not yet reached their peak. In the car universe, the big bank gives the luxury and high-end marques the edge over volume-oriented manufacturers because of their pricing power and their strong market positioning.
Ferrari, Porsche and Mercedes-Benz are also on the “Most Preferred” list of UBS. In the view of the experts, the Italian motor racing specialist offers a unique business model which enhances its price clout and attractiveness. In view of the strong results in the opening quarter and the further upward potential of the financial forecast for the year as a whole, the experts see scope for the share to outperform. It's a similar story with Porsche. Alongside solid earnings and cashflow growth, UBS also likes the route being taken towards electrification. For Mercedes-Benz, the research team emphasises the dividend increase and a share buyback programme to the value of EURbn 4, among other factors. Since the order book continues to be well filled and the company looks set to post further sequential growth over 2023, this could probably help the share outperform.
The brand-new bonus certificate from Leonteq allows an ideal exposure to the three luxury carmakers, Ferrari, Mercedes-Benz and Porsche. The high-carat features concern not only the underlying stocks, but also the product terms. With a term of three years, the certificate offers a “turbo boost” if prices climb, alongside a comfortable risk buffer of 41%. The upside participation is 250%, which means that the product leverages possible price rises of the car trio – without any limit.
The bonus certificate, which is counted as a participation product, thus shares disproportionately in rising prices of the underlyings, yet has a lower risk than a direct investment. That is because possible corrections are skilfully cushioned with the safety barrier at 59% of the initial fixing. If, for example, the trio has plunged 20% by the end of the term but without ever breaching the barrier, holders will still get back the full nominal amount. Conversely, if the three shares have gained 20% by the final fixing the investment actually finishes with a 50% profit thanks to the upside participation of 250%. Only if a barrier event occurs can losses arise, because then the bonus mechanism switches off. In this scenario investors will participate directly in the performance of the weakest stock in the basket – both downwards and upwards.
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