May 6, 2016

Stern would recommend Metro stocks to Julia Engelmann

Yesterday, Dr. Stern went to a performance in Kaufleuten by Julia Engelmann, the German poetry slammer. The show was beautiful and ended with a standing ovation. When he woke up this morning, he was thinking, what stock would he recommend to Julia?

Julia is 23, something she mentions often. This means, she is at the right age to start saving as an "independent adult of age", as she likes to declare herself when speaking about herself and her mother. If you have fifty years until you start spending your retirement savings, you should start with stocks because only stocks work for your money and pay you a decent long-term return, as he has shown in this video.

But which stock out of the 10,000 stocks that Obermatt covers would be the right one for Julia? The Obermatt stock filter makes that choice easy. First, we filter for stocks sized XXL, because very large companies are the safest, thanks to the number of "co-investors", large management teams and experienced boards.

As a German citizen, Julia should first look at German stocks because she would be familiar with the companies based on personal experience. Now, the stock filter shows only a few stocks that meet both criteria: size XXL and country Germany. Financial stocks are out of the question because they are too complicated to understand. The automotive stocks have a bad perception right now and, therefore, are probably not the first stock that Julia would want to buy. Finally, Julia shouldn’t buy Lufthansa because the incentives aren’t right in the airline industry (more here).

The best remaining stock on the Obermatt stock filter list is Metro, with a combined score of 87 out of 100 points. All financial numbers are quickly assessed because they are all green on the Obermatt financial analysis of Metro. This means that Julia doesn’t have to worry about Metro’s financials at all. My guess is that she doesn’t want to do that anyway.

Clicking on the Metro homepage would further help Julia make her investment decision. The Metro website reveals several things that Julia might find of interest. First, Metro is active in the digital world, where Julia feels at home with her 10 million YouTube views. More importantly, Metro favors the integration of refugees into Germany. That’s a position that Julia favors, as she states repeatedly in her shows.

For Julia’s first stock, Dr. Stern would recommend Metro. It’s a good fit for her and he bought it for his own portfolio.

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