After the positive half-year figures from RWE, experts reiterated their buy recommendations with high price targets. With bonus certificates, investors can also achieve high returns if the share cannot or only partially fulfill the high expectations.
On May 20, 2022, the RWE share recorded its highest value in ten years at EUR 43.97 after a long period of price increase. After this high, the utility share corrected to up to 35 euros. In the expectation that RWE would be one of the beneficiaries of the high energy prices, however, it has risen significantly again in the past few weeks and once again surpassed the 40 euro mark.
After the announcement of the solid figures for the first half of 2022, published on August 11, 2022, experts with price targets of up to EUR 60 (Goldman Sachs and JP Morgan Chase) reiterated their buy recommendations for RWE shares.
The investment idea
For investors who are forecasting further price potential for RWE shares, which the majority of experts recommend buying because of the consistently positive future prospects, now could be a good time to invest in RWE shares.
However, if you want to significantly reduce the price risk of buying shares directly and still want to take advantage of the opportunity for high returns, you could consider buying a bonus certificate with a cap as an alternative to buying shares directly. These products enable positive returns not only when the share price rises, but also when the share price stagnates or falls.
The way it works
If the RWE share never touches or falls below the barrier of EUR 26 by the valuation date of the certificate, then the bonus certificate with cap will be repaid on September 22, 2023 with the bonus level of EUR 45.80.
The key data
The barrier for the DZ Bank bonus certificate with cap (ISIN: DE000DW4SC39) on RWE shares is EUR 26. At 45.80 euros, the bonus level and cap were attached. The cap defines the maximum payout amount of the certificate. Valuation date is September 15, 2023, the certificate will be redeemed on September 22, 2023. With the RWE share price of EUR 41.81, investors could purchase the certificate for EUR 41.45. The certificate is therefore cheaper to get than the share.
The chance
Since investors can currently buy the certificate for EUR 41.45, it enables a gross return of 10.49 percent in 13 months (equivalent to 9 percent per year) if the share price has never fallen 37.81 percent to EUR 26 or below by the valuation date falls.
The Risks
If the RWE share touches the barrier of EUR 26 by the valuation day and the share is trading 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 41.45, then the certificate investment will cause a loss.
This article does not constitute a recommendation to buy or sell RWE shares or investment products based on RWE shares. No liability is accepted for the correctness of the data.
