#SaxoStrats: BMW looks attractive on 28% plunge
We are launching a new tactical position in BMW (long) driven by the recent 28% plunge in the stock price since mid-March. The decline has been driven by concerns over China’s economy, but the interesting thing is that BMW has accelerated its sales growth from zero to 15% the past year concurrent with China sales hitting a complete stop.
The 3% CNY devaluation is not a worry as the EUR trade-weighted is still trading at the lowest levels since 2003 driving sales growth in the US and making a positive impulse to the European economy lifting car sales in Europe.
Management and risk description
There is more upside and than downside in this trade as BMW valuation (12M forward EV/EBITDA) is around average since 2011 which is attractive given economic outlook, weak EUR and brand recognition.
Buy at the market with a trailing stop of €12.18 in steps of €1.22.
— Edited by Oliver Morrison