Foreign stocks: Will investor favorites continue rising?

“Tesla still significantly overvalued”

“At the current price level, we consider the Tesla share to be a speculation and would not be surprised by further price losses,” explains Torsten Tiedt from the stock platform aktienfinder.net. Despite the recent fall in the share price, the share still appears to be significantly overvalued with a price/cash flow ratio of almost 80 for the current financial year, especially as the core business remains under pressure. Tesla delivered almost 20,000 fewer cars in 2024 than in 2023. “In our view, the recent rise in margins is due less to more efficient production than to falling raw material costs,” explains Tiedt, adding that this could change at any time.

ASML: Wait and see?

Nvidia, which was number one in terms of turnover for most of the year, is now in second place. Other Magnificent 7 companies are also on the list of the foreign stocks with the highest turnover, specifically Amazon, Apple, Microsoft and Alphabet, as well as AI value Palantir, crypto winners Microstrategy and Coinbase and Dutch chip manufacturer ASML.

ASML shares (NL0010273215) have recovered some of the heavy losses from the second half of 2024 and are currently trading at EUR 738, still far below the all-time high of just under EUR 1,021 from last summer. Tiedt believes ASML is fundamentally in an excellent position - thanks to the AI boom and its dominant position in the patterning market. However, the strained US trade relations with China are a high risk, as China currently accounts for around a third of total sales. “With a forward P/E ratio of 30, the share has reduced its overvaluation, but due to the political risks we would wait for a further setback before making a one-off purchase.”

“The fight against obesity continues to pay off”

Few stocks from other sectors have made it onto the turnover list, including the pharmaceutical companies and weight-loss profiteers Novo Nordisk and Eli Lilly and France's luxury group LVMH. Novo Nordisk (DK0062498333) has lost 40 percent in value since its all-time high last summer and currently costs 80 euros, as Tiedt notes. However, this has now resulted in a P/E ratio of 22, which roughly corresponds to the average valuation of the past ten years. “Although the study results of the new weight loss drug were rather disappointing and competitor Eli Lilly is currently ahead, the fight against obesity remains a profitable business for Novo Nordisk,” emphasizes Tiedt. In addition, Novo Nordisk is and remains the global market leader in diabetes treatment. “We consider the share to be fairly valued after the correction and, thanks to a forecast annual profit growth of a good 20 percent for the next two years, we expect the share price to rise significantly in the medium term.”

LVMH: “Benefiting from the trend of rising global prosperity”

LVMH has been struggling for some time after its soaring price during the pandemic. The share now costs 690 euros, at its peak in April 2023 it was over 900 euros. Jonathan Neuscheler from the equity research and financial education platform Abilitato believes the share is exciting - but more for long-term investors. He sees a number of challenges for the coming quarters. Due to the significant rise in the cost of living, many consumers are focusing their spending differently. “The operating margin could weaken even further,” says Neuscheler.

Another important aspect is the dependence on the Chinese market. The purchase of Western luxury brands is increasingly viewed critically there. In other sectors - such as cars and smartphones - the Chinese are already increasingly turning to local alternatives. In addition, the valuation with an estimated P/E ratio of 22 is not particularly favorable in view of the risks. In the long term, however, the share certainly offers opportunities: “LVMH offers a great opportunity to benefit from the trend of rising global prosperity,” Neuscheler is convinced. Another plus point is the broad portfolio, which is almost as diverse as a luxury ETF. 

By Anna-Maria Borse, 16 January, 2025, © Deutsche Börse