Germany is really struggling. But Rheinmetall AG (RNMBY) shares are up 20% since being added as an Explorer stock recently, despite China imposing export controls on 14 European companies, including the firm, notes Carl Delfeld, editor of Cabot Explorer.
Along with chemicals and machinery, autos have been a key source of German strength since the 19th century. Challenges now include high energy costs, high taxes, rules that made it difficult to lay off workers, American tariffs, stiff Chinese competition, and a difficult transition to electric vehicles.
RheinMetall AG (RNMBY)
But Rheinmetall is a leading German defense company on track to capture 20%-25% of NATO Europe’s equipment spending through 2030. It has a wide moat, even as its valuation remains high.
One last thing I’m watching: Interest rates continue to edge up. I’m eyeing 10-year Treasury bond yields in particular. If they go from the current rate of around 4.7% to the 5% level, stock markets will take a hit. This would also likely push mortgage rates way past 7%.
