Company name: BMW Group
Current Price: €55
Target Price: €75
Projected Yield: 36%
Time Line: 1 to 3 years
Risk: Above average
About BMW Group
BMW develops, manufactures, and markets automobiles and motorcycles, as well as spare parts and accessories, worldwide. The automotive part of the company sells cars branded as BMW, MINI, and Rolls-Royce. The motorbikes developed and sold by BMW are called BMW Motorrad. The financial services segment of the company is engaged in car leasing, retail and dealer financing, and also includes customer deposit business and insurance activities.
What's the Idea?
Capitalize on the aggressive transformation of the company into one of the leading electric vehicle manufacturers moving forward.
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Why Trade BMW Group?
Reason 1: Q2 2020 Report Exceeded Expectations
The earnings at €19.97 billion were €1.11 billion above expectations. The report also showed good sales numbers in China, while the Q2 EPS was at €0.35. Despite the negative impact of the pandemic, BMW Group was able to achieve a positive EBIT margin of €498 million in the first six months of the year.
BMW initiated a planned restart of production facilities in Q2. Despite an overall decline in sales , electric BMW's and MINI's deliveries rose to 61 652 units (by 3.40%) in the first six months of 2020.
The company looks optimistically into the last six months of the year, with a target EBIT margin of 0 to 3% for the automotive segment in 2020. The continuous expansion of the lineup is expected to drive further growth towards Q3 and Q4.
Reason 2: Aggressive BMW Group Plans to Introduce Electric Vehicles into Its Product Line and Reduce CO2 Emissions
BMW Group has set targets to reduce CO2 emissions by 2030. This reduction is planned throughout the entire life cycle of its products: from production and delivery all the way to the end of the vehicle's life. CO2 emissions per vehicle should be reduced by at least one-third by 2030, compared to 2019. Over the course of the vehicle lifespan, CO2 emissions are to be reduced by 40% per one kilometer driven.
The 10-year goal is to have 7M+ electrified BMW Group vehicles on the road, with around two-thirds being fully electric. BMW already has a long term product strategy to massively promote the use of electric vehicles.
The BMW Group continues investing with a focus on future technologies, with the R&D investments being at $ 2.70B. This number includes the costs of the ongoing electrification for the development of BMW iNEXT.
Reason 3: BMW Group Is Already Entering the Electrified Vehicle Market
By late 2021, the company will offer 5 all-electric production vehicles: BMW i3, MINI Cooper SE, BMW iX3, BMW iNEXT, and BMW i4. The next generation of the BMW 7 Series will be even more focused on electricity. The new flagship car model will be available with four types of engines, including an electric one.
The company plans to deliver 25 electrified models by 2023, half of which will be fully electric. BMW said they would offer an all-electric version of 5 Series, but a launch date is still unknown. CO2 emissions coming from production and facilities during this period will be reduced by 80% per vehicle.
Reason 4: BMW Signed a €2B Contract with Northvolt
Northvolt, a Swedish company founded by two former Tesla executives, will now manufacture batteries for BMW. The batteries will start being shipped in 2024 under a long term contract worth €2 billion. Northvolt will become the third major supplier of this technology to BMW, along with China's Contemporary Amperex Technology Co and South Korea's Samsung SDI. This deal is aimed at helping BMW boost electric vehicles promotion.
How to Use the Investment Idea
- Buy BMW shares at their current price.
- Allocate no more than 3% to 4% of your midterm transaction budget.
- Sell the shares after their price reaches €75-€76 per share.
How to Buy BMW Group Shares
If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.
After opening an account, you can buy shares in any of the following ways, whichever is more convenient to you:
Freedom24 Online Store: This is the easiest option. At the top of this page, add the number of shares you want to add to your cart, and pay with your credit card. Once the transaction is complete, the shares you've bought will appear on your investment account.
Freedom24 Web Platform: Go to the Web Terminal section, type BMW.EU (BMW Group ticker in the Frankfurt Stock Exchange) in the search box, and select Bayerische Motoren Werke AG in the results. Open a secure session in the trading window on the right, select the number of shares you want to buy, and click Buy.
Freedom24 iPhone App: Go to the Price screen and tab the search icon in the top right corner. In the search dialog that shows up, type BMW.EU (BMW Group ticker in the Frankfurt Stock Exchange), and select Bayerische Motoren Werke AG in the results. You will then see BMW stock in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of shares you want to buy and click Buy.
Buy BMW shares and invest in a new stage of the car evolution!
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