FANews
FANews
RELATED CATEGORIES
Category Investments

Stock Pick of the Week

05 November 2021 Momentum Securities

THIS WEEK’S PICK: Adidas

About: Adidas is a German multinational corporation, founded and headquartered in Herzogenaurach, Germany, that designs and manufactures shoes, clothing and accessories. It is the largest sportswear manufacturer in Europe, and the second largest in the world.

Serfaas Badenhorst, Momentum Securities Portfolio Manager for the Cape Town region, shares his insights.

• Download the video here
• Download the audio here

Transcription:

Our Stock Pick of the Week is another offshore apparel company that would form a great defensive and value stock in your portfolio – a very famous brand we all know, and that is Adidas.

Now, Adidas is based in Germany and they are responsible for the design, distribution, and manufacturing of sporting and athletic apparel. Although they are based in Germany, most of their revenue are derived from the United States of America and mainland China. Both of them, contributing 23% of the annual revenue of Adidas with Germany contributing 6% to the annual revenue.

Adidas has significantly outperformed the DAX, where it is listed, and we do see this trend continuing. From a price-to-earnings ratio, currently, Adidas is trading at a 32 versus its 5-year average of 42, which shows a significant discount. It's also important to note that Adidas is at a significant discount to its peer group, which is trading at a 38 PE.

With lockdown restrictions being minimised and the economy is opening up again, companies like Adidas will be greatly poised to benefit from retail spending. We see this continuing into the future with a strong balance sheet and a set market segment, especially in the sporting and athletic brand industry. For that reason, our Stock Pick of the Week is Adidas.

Quick Polls

QUESTION

Have you seen insurers implementing rate adjustments / risk management around climate change?

ANSWER

Yes
No
fanews magazine
FAnews June 2024 Get the latest issue of FAnews

This month's headlines

Understanding prescription in claims for professional negligence
Climate change… the single biggest risk facing insurers
Insuring the unpredictable: 2024 global election risks
Financial advice crucial as clients’ Life policy premiums rise sharply
Guiding clients through the Two-Pot Retirement System
There is diversification, and true diversification – choose wisely
Decoding the shift in investment patterns
Subscribe now