Mercedes-Benz shares have been moving sideways for a few weeks. With bonus certificates with a cap, investors can also generate high returns if the movement continues, which is naturally not possible with direct equity investments.
After the price slide from the beginning of March 2022 to up to 54.67 euros, the Mercedes-Benz share quickly re-established itself above the 60 euro mark. After the announcement that vehicle sales in the first quarter fell significantly to 487,000 units compared to the previous year due to the supply bottlenecks in the chip area, but that the group was still able to increase sales and profits, the share began to move sideways within a range of 60.30 up to 67.50 euros.
If the forecasts of those experts who recommend buying the Mercedes-Benz share because of the proven and high-margin premium strategy with price targets of up to 90 euros (Berenberg Bank) come true, then the share should at least be well supported at the current level.
The investment idea
At the still reduced price level, an investment in the share, which is classified as slightly undervalued, could be quite interesting. Investors who want to significantly reduce the price risk of buying shares directly and still want to achieve returns in the double-digit percentage range could consider buying a bonus certificate with a cap as an alternative to buying shares directly.
The certificate presented below will yield a return of 17 percent even if the Mercedes-Benz share comes under pressure in the coming months.
The way it works
If the Mercedes-Benz share never touches or falls below the barrier of EUR 49.00 by the valuation date of the certificate, then the bonus certificate with cap will be repaid on June 23, 2023 with the bonus level of EUR 80.00.
The key data
The barrier for the DZ Bank bonus certificate with cap (ISIN: DE000DW2Z1Z6) on Mercedes-Benz shares is EUR 49.00. Bonus level and cap were attached at 80.00 euros. The cap defines the maximum payout amount of the certificate. Valuation date is June 16, 2023, the certificate will be redeemed on June 23, 2023. With a Mercedes-Benz share price of EUR 67.55, investors were able to purchase the certificate for EUR 68.19.
The chance
Since investors can currently buy the certificate for EUR 68.19, it enables a gross return of 17.32 percent in just over twelve months if the share price never falls by 27.46 percent to EUR 49.00 or below by the valuation date.
The Risks
If the Mercedes-Benz share touches the barrier at EUR 49.00 by the valuation day and the share is listed below the cap on that day, the certificate is redeemed at the closing price of the share determined on the valuation day. If this is fixed below EUR 68.19, then the certificate investment will cause a loss.
This article does not constitute a recommendation to buy or sell Mercedes-Benz shares or investment products based on Mercedes-Benz shares. No liability is assumed for the correctness of the data.