The German stock index Dax is facing a turning point. To date, 30 companies are represented in the German leading index. For example, investors can buy Volkswagen shares listed in the Dax or many other securities of the largest German corporations such as SAP, Daimler or Deutsche Bank.
Dax expands from 30 to 40 companies
But in the future, a total of 40 companies will be represented in the Dax. The reform is scheduled to enter into force at the beginning of September. However, the background to the expansion is a fundamental revision of the rules for the stock index.
The most important trigger was the Wirecard scandal. The payment service provider had inflated its balance sheets by billions and had finally fallen into bankruptcy. Many shareholders lost a lot of money and the top management has to answer to the court. In response, Wirecard was replaced by Delivery Hero in the 30 Dax companies.
In order to avoid a repeat of such an incident, companies will be subject to more scrutiny in the future before they are listed in the stock index. In addition, it is a prerequisite that the groups have been profitable for two years before they are listed in the leading index.
Inventory Protection for Delivery Hero
This is intended to make the composition of the Dax more solid and less risky. However, it also restricts the list of candidates somewhat. For example, Delivery Hero should not have been included under the new rules, as the delivery service has so far incurred losses. However, there is a protection for the companies already listed in the Dax. This means that Delivery Hero remains a part of the exclusive club despite the lack of profits.
In addition, the selection of Dax companies will be determined on the basis of market capitalization on the stock exchange. Trading turnover, on the other hand, is no longer decisive as long as a minimum turnover has been achieved.
For investors, the reform means that they will be able to trade 10 more shares in the Dax in the future. The following overview shows which companies have the best chances for a Dax inclusion and what the return opportunities look like.
Airbus: Already top 5 in the Dax by market capitalization
Since market capitalization will be the decisive criterion for inclusion in the Dax in the future, it is considered certain that the aircraft manufacturer Airbus will get a place. After all, Airbus ‘ market capitalization is a staggering $ 89 billion.
This would immediately make the company the fifth largest company in the Dax. Only SAP, Linde, Volkswagen and Siemens are ahead of Airbus in terms of market capitalization.
For investors, Airbus shares could be very interesting. After the Corona crash, it is clearly on the uptrend again. When much of the air traffic was cancelled in the wake of the pandemic and airlines cancelled their orders for new aircraft, Airbus’s share price initially plummeted dramatically.
From record values of almost 140 euros per share at the beginning of 2020, the price fell to values of less than 50 euros. Anyone who has invested at this time can already look forward to a strong return. Because the paper is currently trading at around 114 euros again, more than twice as high as at the low point in 2020.
Airbus dependent on tourism-analysts advise to buy
Whether the upward trend continues is likely to depend above all on how the corona pandemic develops and whether unrestricted air traffic becomes possible again. As an aircraft manufacturer, Airbus is dependent on the airlines to order new aircraft. In addition, it is likely to be important how Airbus performs in direct competition with American competitor Boeing. The latter was at times more in crisis than Airbus as a result of several aircraft crashes and technical problems.
Analysts estimate Airbus ‘ share price development to be very positive for the future. Among 21 analysts, 17 rate the stock with a “buy” or another 4 with “Hold”. No one of the experts advises selling Airbus shares.
Porsche attacks Tesla
The car manufacturer Porsche is also considered a safe candidate for the enlarged Dax. The manufacturer of luxury sports cars is a successful brand internationally. Now the company also wants to catch up in terms of electromobility. With the Taycan, Porsche is launching a direct attack on Tesla’s luxury cars and wants to offer the market leader serious competition.
The Porsche share has also recovered very well from the crash caused by the corona pandemic. In March 2020, for example, the paper temporarily traded below 34 euros. But in the meantime, the Porsche share already costs around 85 euros again and has thus increased in price by a whopping 150 percent.
Clear buy recommendation for Porsche shares
Analysts attribute the Porsche share to great opportunities for a further price increase. A medium price target of more than 118 euros is expected. The bullish analysts even consider prices of 134 euros possible, which would correspond to an increase of more than 50 percent compared to the current quotation.
Accordingly, 8 out of 9 analysts surveyed rate the share of Porsche with a “buy”. None of the experts recommends selling the Porsche share in the current favorable market environment.
The fashion online shop Zalando also has a great chance of being listed on the Dax. Unlike many other companies, Zalando was able to use the corona crisis more as a turbo for its own business than the pandemic would have harmed.
Zalando: Beneficiaries of the Corona pandemic
The reason is the digital orientation of the company. During the crisis, the retail trade was temporarily closed in order to interrupt the infection chains. The digital purchase of shoes and clothing, on the other hand, continued unhindered. Not only industry king Amazon has benefited from this, but also the German retailer Zalando. Digital shopping is convenient, fast and, above all, contactless from the home sofa.
Even after the crisis, many customers who have come to the taste are likely to remain loyal to online purchases and guarantee further access to the already growing business.
Zalando’s stock is already on a strong upward trend. From around 31 euros in March 2020, the paper has more than tripled in price with a current quotation of around 94 euros.
Not all analysts bullish on Zalando stock
Analysts are mostly bullish about Zalando’s continued price performance. 17 out of 27 respondents give a “buy”recommendation. Further analysts advise to “hold” the paper. However, there are also at least 2 analysts who advise a “sell”.
Airbus, Porsche and Zalando are just three promising candidates that investors are likely to find in the Dax soon. For example, the cookbox supplier Hellofresh, the consumer goods giant Beiersdorf, sporting goods manufacturer Puma or the medical technology specialist Siemens Heathineers can also calculate good chances.