The Mercedes-Benz share is forecast to have further potential after the recent price increases. With bonus certificates with a cap, investors can also generate high returns if the positive expectations are not or only partially fulfilled.
The rise in the price of the Mercedes-Benz share (ISIN: DE0007100000), fueled by good sales and profit figures, reached its temporary peak on January 12, 2023 at 69.13 euros, the highest price in ten months. The share then corrected briefly to as much as EUR 65.28 before rising again to its current level of EUR 68.85.
In the expectation of solid business figures for the fourth quarter of 2022, the experts at UBS reiterated their buy recommendation for the share with a target price of EUR 79.
The investment idea
After the 25 percent gain in price of the Mercedes-Benz share, which is still considered undervalued, there could still be a chance of further price gains even at the high level. However, if you want to significantly reduce the undoubtedly existing price risk of direct share purchases and still want to achieve a return in the double-digit percentage range, you could consider purchasing a bonus certificate with a cap as an alternative to buying shares.
Apart from dividend payments, the direct purchase of Mercedes-Benz shares will only enable a positive return if the share price increases. With bonus certificates with and without a cap, investors can achieve disproportionately high returns not only when the share price rises, but also when prices are stagnating or falling.
The way it works
If the Mercedes-Benz share never touches or falls below the barrier of 47.50 euros by the valuation date of the certificate, then the bonus certificate with cap will be repaid on December 22, 2023 with the maximum repayment amount of 75.00 euros.
The key data
The HVB bonus certificate with a cap (ISIN: DE000HC2BGT9) on the Mercedes-Benz share has a bonus level and a cap of EUR 75. The cap defines the maximum payout amount of the certificate. The barrier activated by the valuation date, December 15, 2023, is EUR 47.50. With a Mercedes-Benz share price of EUR 68.85, investors were able to purchase the certificate for EUR 66.52.
The chance
Since the certificate can currently be bought at 66.52 euros, it enables a gross return of 12.74 percent (=14 percent per year) until December 2023 if the share price never increases by 31.01 percent to 47.50 by the valuation date euros or below.
The Risks
If the Mercedes-Benz share price touches the barrier of EUR 47.50 by the valuation date and the share is listed below the cap on the valuation date, investors will receive one Mercedes-Benz share for each certificate in their custody account. If this share is sold below EUR 66.52, the purchase price of the certificate, then the investment will cause a capital 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.
