December 15th, 2015

BMW stock is up 58% since April, is it still a buy?

By: Invezz
BMW stock is up 58% since April, is it still a buy?

BMW (OTC: BMWYY) stock has advanced from $15.9 above $25.8 since April and the current price stands around $25. The next several months will be competitive for the global auto industry and the business of BMW is also under the pressure from lower revenues due to COVID-19.

Fundamental analysis: BMW sales fell due to COVID-19

Bayerische Motoren Werke AG, also known as BMW, is a German multinational company that produces vehicles and motorcycles. The company is attracting investors’ attention in this uncertainty on the financial markets because it performs much better than its competitors.

When trading BMW stock, investors should have in mind that this is a stable company with a good position on the market. Shares of BMW could be a good investment option and most financial analysts are also expecting its price to rise considerably in the next several years.

If we compare total stockholders’ equity of $65.67B and the market capitalization of $49.58B, we can notice that this stock is not overvalued and maybe now could be a good time to invest in BMW stock. Another useful information for potential investors is that this company has paid more than $8B dividends to its shareholders in the last three years and this number can be even bigger in the future.

Some estimates say that the auto market is expected to grow only slightly in the next several years but BMW will be one of the major players. If you decide to buy BMW shares you should have in mind that there are also several negative facts that are connected with this company.

European car registrations dropped 5.7% in July and were down 18.9% in August, according to a news release from the European Automobile Manufacturers’ Association. Before interest and taxes, BMW’s second-quarter loss came in at $780 million versus the year-ago figure of $2.57 billion of EBIT (earnings before interest and taxes).

CEO Oliver Zipse of BMW, however, expressed confidence that the company’s performance in the second half of the fiscal year is likely to improve.

BMW sales in Europe fell -32% in Q2 to 372,754 vehicles while a total of 121,318 units (-29.5%) were sold in the USA in the first half of the year. Thanks to second-quarter volume growth compared to the previous year, six-month sales only decreased by 6.0% to 329,447 units in China.

The main reason for this is the Covid-19 pandemic but once the situation has stabilized, the price of BMW stock will be at much higher levels.

Technical Analysis: BMW stock has a good risk/reward ratio

In my opinion, this stock has a good risk/reward ratio and investors in BMW stand to gain a lot more for taking a comparatively smaller risk. On this chart, I marked current resistance and support levels.

Data source: tradingview.com

The current supports levels are $22 and $20, $28 and $30 represent the current resistance levels. If the price jumps above $28 it would be a signal to buy BMW stock and we have the open way to $30.

Rising above $30 supports the continuation of the bullish trend and the next price target could be located around $35. If the price falls in the upcoming period, every price in a range from $15- $20 could be a very good opportunity to invest in BMW stock.

Summary

The next several months will be competitive for the global auto industry and the business of BMW is also under the pressure from lower revenues due to COVID-19. Despite this, my opinion is that shares of BMW could be a good investment option and most financial analysts are also expecting its price to rise considerably in the next several years.

The post BMW stock is up 58% since April, is it still a buy? appeared first on Invezz.

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