A ‘stimulus wave’ is set to wash over Germany — and these stocks could benefit
Between Germany’s new coalition agreement and the country’s recent fiscal U-turn, stimulus is set to soar in Europe’s biggest economy. The fiscal package enshrined in Germany’s constitution in March includes changes to long-standing debt rules, paving the way for higher defense spending and a 500 billion euro ($548 billion) infrastructure and climate fund. Germany’s coalition agreement , meanwhile, suggests the new government could establish a further 100-billion-euro fund to boost growth and innovation, adjust tax rules for businesses, work to adjust energy prices and more. “Now the question is how investors can participate in this deal and ride along the stimulus wave for the German economy,” Deutsche Bank strategists and analysts led by Maximilian Uleer said in a note on Tuesday, naming their top stocks. Tech “Increased digitization spending” as part of upcoming stimulus is expected to boost the German IT industry, especially businesses with a strong public sector presence, Deutsche Bank said. That includes leading German IT services firm Bechtle . “Business with the public sector accounts for ~40% of revenue and the company generates ~60% of revenue in its home market, hence should benefit significantly from the money earmarked to be spent on digitization in Germany,” research analyst Lars Vom-Cleff said. Deutsche Bank suggested Bechtle’s upside potential was 37%, with a target price of 48 euros. Sixth largest independent IT services firm Cancom , meanwhile, has upside potential of 38%, according to the analysts. Public sector business accounts for around 35% of its revenue, and around 65% is generated in Germany, they said. Industrials Lower energy costs and higher infrastructure spending could boost manufacturing and industrials companies, Deutsche Bank said. Two of the companies named as potential beneficiaries are German materials handling manufacturer Kion and Austrian technology and machinery manufacturing business Palfinger. Kion, which is a leader in forklifts and warehouse automation, should not only benefit from infrastructure investment and a wider economic recovery in Germany, but is also “relatively well protected against tariffs,” Deutsche Bank research analyst Gael de-Bray said. Palfinger, meanwhile, a crane and lifting company, is expected to benefit from its exposure to building construction, infrastructure, the public sector and railways. Around 15% of its revenue is generated in Germany. Deutsche Bank gives the companies 36% and 50% upside potential, respectively. Autos While Germany’s auto sector is expected to be hit hard by U.S. President Donald Trump’s tariffs and has been struggling with competition from China, it could be boosted by domestic measures, according to Deutsche Bank. “Improving economic activity, higher transport demand and broader incentives for e-mobility to provide tailwinds,” the analysts said. Volkswagen is one company that could benefit, the bank said, with its passenger car business set to get a boost from fresh electric vehicle incentives, while its vans and trucks divisions could be strengthened by rising economic activity. Deutsche Bank puts the carmaker’s target price at 125 euros, with 43% upside potential.
