/Riedl's Dax radar: Favorites and turning stocks against the downturn
Riedl's Dax radar: Favorites and turning stocks against the downturn

Riedl's Dax radar: Favorites and turning stocks against the downturn

Riedls Dax-Radar

Zwischen Wackeln und Wende: An der Börse herrscht kräftiger Wellengang, einzelne Aktien scheinen bereit für einen Richtungswechsel. Quelle: Getty Images

Favorites and reversal stocks against the downturn

Image: Getty Images

The consequences of the war, inflation and a shaky economy hit the stock market hard. Nevertheless, there are numerous individual values ​​that also now offer good prospects of returns: The opportunities and risks of all individual values ​​in the Dax.

The biggest sell-off in more than a decade is currently underway on the international bond markets. In America, yields on 10-year US bonds have risen from 1.68 percent to as much as 2.55 percent in a single month. In Germany, the yields on ten-year federal bonds increased from minus 0.09 percent to plus 0.71 percent over the same period. The prices of public bonds have broken their long-term upward trend, which has existed since the financial crisis of 2008, and have taken a new direction with great momentum. Even if there is likely to be a counter-reaction after such a violent market movement, the new basic direction in the bond market is: yields up, prices down.

For the real economy, the bond markets are giving an unmistakable signal: after four decades of falling interest rates, the interest rate hikes initiated as a result of massive price increases and excessive money supply are tantamount to a turning point. It is unlikely that the old uptrends in bond prices will continue in the foreseeable future; for the time being, there are no more than brief recovery phases in sight for the listings of interest-bearing securities. Whoever buys bonds has to reckon with declining prices in large phases of the term. Investing until maturity is becoming more important again. With terms that are not too long, you can remain flexible.

The turning point on the bond market is clearly reflected on the stock exchanges. The relevant stock market indices offer a different, quite ambivalent picture. In the panic at the beginning of March, the American Dow Jones rushed through the broad support zone between 33,000 and 34,000 points, but in the subsequent recovery in March it freed itself from the danger zone and temporarily even got back above the 35,000 mark. As on the Nasdaq technology exchange, no major trend reversal has yet been completed. In view of the diverse crisis burdens (inflation, war, economic risks), the US markets are showing remarkable resilience.

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The German stock market has been hit noticeably harder. The Dax has fallen well below the central support zone by 15,000 points. The recent retracement to this level, this time from below, confirms the importance of this range. In contrast to the US markets, the Dax has not yet managed to escape from its downward zone.

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This relative weakness of the German stock market clearly shows how many more economies and companies in Germany are affected by the war in Ukraine and its consequences than in America. To put it bluntly: while the German stock exchange currently has to deal with three main risks (inflation, war, economic downturn), the US stock exchanges only have two of them: inflation and a tipping economy.

Interim Balance to all individual values: The Dax is stronger than its reputation

The companies and shares in the Dax cope with the triple burden of the risks of inflation, war and the economy in different ways. As investments, the individual stocks also offer very different perspectives. With a view to long-term development extending over five years and more, the Dax shares can be divided into five groups:

First Group:
Longtime Favorites

, which are still in a stable upward trend. These include Linde, Merck, Qiagen, Deutsche Börse, Hannover Re, RWE, Siemens Healthineers, Symrise and Sartorius. The operational businesses of these companies are characterized by a long-term growth trend. The rating is sometimes high, which is why phases of weakness are always suitable for follow-up.

Also read: These Dax companies score with the prospect of high dividends

Second group:
Robust Variation Stocks, which have given way more clearly in the meantime, but whose overall course image is healthy in the long term. These include Allianz, Telekom, Siemens, Mercedes-Benz, Daimler Truck, BMW, E.On, Porsche, Airbus, MTU, Munich Re, Brenntag, Deutsche Post, Infineon. Basically, these are the Dax classics from industry and insurance. The stable condition of these shares from a long-term perspective is also the most important pillar for the German stock market as a whole.

Inflation : Das bedeutet die drohende Stagflation für Aktien, Gold und Anleihen

Third Group:
Shaky candidates, some of which have recently had to accept heavy losses, but are not yet pointing downwards in the long term. These include: Volkswagen, BASF, SAP, Covestro, Adidas, Puma, Vonovia and HeidelbergCement. Overall, this group has been hit harder than average by the consequences of the war in Ukraine. If there is a relaxation here, rapid and dynamic recoveries should be possible.

Fourth group:
Turnaround Stocks that are about to turn up after a long move down. These include: Deutsche Bank, Bayer, Fresenius, FMC. With the exception of Deutsche Bank, these stocks are practically non-responsive to the Russian question. The primary concern here is how companies can sustainably recover after a long strategic and operational downturn. Deutsche Bank and Bayer have already done well here, and the Fresenius Group could be next in line.

Fifth group:
Losers and hopefuls which are in an unchecked downtrend and are not yet showing any signs of a turnaround. These include: Continental, Henkel, Hello Fresh, Zalando and Delivery Hero. Until there are clear signs of an operational or strategic recovery, these stocks are not yet suitable as an investment. Even with the classics Continental and Henkel, the first phase is about where price depths can be sounded out. In both cases, this could be in the wide range between 50 and 65 euros.

Conclusion for the Dax: After four weeks of strong price recovery, it is unlikely that the Dax will now also overcome the course bulwark by 15,000 points in one go. In the short term, another setback or at least a cooling off could take place. It could drop to the 13,800 area without destroying the promising stabilization seen in March. The less the Dax reveals ground again in its next, short-term correction, the better the medium-term prospects afterwards.

Of course, it cannot be ruled out that the Dax will slip further despite its recent stabilization. This could be triggered by continued horrendous inflation figures, a new recession or an escalation in Russia. Nevertheless, the relative strength of the globally dominant US markets and the generally robust condition of numerous individual values ​​in the Dax from a long-term perspective speak against such a downfall scenario. A mixture of long-standing favorites and turnaround candidates could be particularly worthwhile as an investment strategy.

Also read: Non-market profits? These stocks and funds offer good opportunities

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