Germany’s economy is facing continued weakness. According to a report published by Roland Berger, the 0.1% contraction in 2023 and the 0.2% in 2o24 will only be countered by a 0.4% projected growth in 2025. While manufacturing orders are recovering modestly since June last year, business sentiments are still low and the industrial production for November was down 3,1% year-over-year. Unemployment also reached 2.81 million in December 2024, which was a 170,000 increase as compared to the same period last year. This pushed the unemployment rate to 6%. Inflation is now expected to average 2% in 2025, which is still down from the 2.2% figure from 2024.
Earlier on March 6, Chris Verrone, Strategas, joined CNBC’s ‘Fast Money’ to express his bullish outlook on the European market. He highlighted a shift in global cyclicality eastward and observed that the European industrials are achieving new highs. Verrone emphasized that the European banks have shown strength over the past 18 months but despite such trends, investors are still not heavily leaning towards European equities. He cited the German ETF under the name of EWG to support his stance, as EWG broke a 20-year high which indicated its departure from prolonged secular stagnation particularly within banks and industrials. However, he did note that energy and basic resources are not showing the same momentum.
The conversation also covered the fact that investors have been overweight in US large-cap tech stocks over the past 12 to 13 years. Verrone relayed that observed extreme bearishness towards the European market as of December 2024, when he visited the region. He particularly noted that peripheral European markets, which include countries like Italy and Spain, have been leading. Whereas Germany has lagged. While Verrone mentioned that he heard Christine Lagarde, President of the European Central Bank, expressed pessimism about the European economy herself during the world economic forum in Davos, he still maintains his bullish outlook. He thinks that the European economic data is improving and global cyclicality has not been extinguished.
That being acknowledged, we’re here with a list of the 12 best German stocks to buy according to hedge funds.
A closeup of a person’s hand managing a portfolio of stocks on a graphically rich financial app interface.
Our Methodology
We used the Finviz stock screener to compile an initial list of top German stocks. We then selected 12 German stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12 Best German Stocks to Buy According to Hedge Funds
12. Evotec (NASDAQ:EVO)
Number of Hedge Fund Holders: 1
Evotec (NASDAQ:EVO) is a drug discovery and development company that partners with pharmaceutical and biotech firms to advance therapeutic solutions across a range of diseases. Its expertise spans from target identification to clinical development, with collaborations focused on innovative approaches in areas like oncology, immunology, and metabolic diseases.
The company’s partnership with Bristol Myers Squibb (BMS) in neuroscience has yielded substantial progress and triggered a $20 million research payment to Evotec (NASDAQ:EVO). This long-standing collaboration, which was initiated in 2016 and is extended through 2031, develops disease-modifying treatments for neurodegenerative diseases. The partnership has already resulted in the in-licensing of EVT8683 (BMS-986419) by BMS.
Evotec’s (NASDAQ:EVO) LAB eN² drug discovery accelerator, in partnership with Novo Nordisk, has selected its first three projects and aims to translate academic research into novel therapeutics for cardiometabolic conditions. This program has expanded to include 5 new academic institutions. Furthermore, Evotec (NASDAQ:EVO) has secured a $4.5 million grant from the Korean government, alongside Yonsei University and Zymedi, to develop novel antibody-based treatments for lung diseases.
11. Trivago (NASDAQ:TRVG)
Number of Hedge Fund Holders: 3
Trivago (NASDAQ:TRVG) operates an online meta-search platform that enables users to compare hotel and accommodation options from various travel agencies and providers. Its platform, which is accessible through localized websites and apps, facilitates travel searches for a range of accommodation types.
In Q4 2024, the company showed a turning point with a 3% year-over-year revenue increase which was driven by a 5% rise in referral revenue. Referral revenue is the income a company generates from customers who were directed to the business by existing customers or other referring parties. This growth is attributed to brand marketing investments that were launched across 23 key markets. These include the AI-powered campaigns that feature a well-known German football manager called Jürgen Klopp.
The company is prioritizing brand building to capture a larger share of the €1.5 trillion travel market, particularly the high-margin hotel segment. Trivago (NASDAQ:TRVG) aims to increase brand investment to pre-COVID levels by using its strong brand recognition in Europe, the Americas, and Asia. This strategy is seen as a growth driver, especially given the increased price sensitivity of travelers, with potential savings of up to 40% for those using Trivago’s (NASDAQ:TRVG) price comparison.