Should I Buy Rheinmetall (RHM)? Finance YouTuber Analysis

The YouTuber advises avoiding Rheinmetall for the specific counter-drone theme, despite its strong financial performance from the Ukraine war. He notes it's a German company listed in Frankfurt, with no clear catalyst from the US-specific Cuba counter-drone narrative. He also mentions currency risk for US investors and plateauing European defense spending as reasons for avoidance in this context.

“The Cuba counter drone narrative is a US-specific catalyst. So whether you love Rin Metal or you hate it, doesn't matter. They're not going to benefit directly.”

The YouTuber believes Rheinmetall is still overvalued despite a recent 50% drop, citing a high P/E ratio of 35 for an industrial company with 7% net margins. He argues that the current growth is unsustainable as it relies on ongoing conflict, and the company's business model requires significant capital investment for expansion, unlike software companies. He also points to analysts downgrading the stock and potential peace talks in Ukraine as headwinds.

“Ich glaube, dass die Aktie jetzt sogar noch weiter als die 1000 € nach unten geht.”

The analyst advises against buying Rheinmetall at its current valuation, which is significantly overvalued with a P/E ratio of 90 compared to historical levels and peers. While acknowledging strong growth prospects due to increased defense spending, he suggests waiting for a substantial price correction, possibly triggered by a peace agreement in Ukraine, before considering an investment.

“Ich persönlich würde nicht investieren. Nicht nur jetzt, weil es nicht mein persönlicher Geschmack ist, aber ich würde eher noch warten beispielsweise auf Ereignisse wie absehbarer Frieden tatsächlich in der Ukraine.”