Over the past three months, I have had the privilege of guiding readers through a series of articles exploring the best investment opportunities in disruptive North American companies. Today, I am temporarily stopping this series just when the Russell 2000—the index that reflects the performance of small and medium-sized American companies—has reached the target that I had marked at the heights of 2021. At this point, it is time, as I often say, to “take out the camera.”
The Russell 2000 faces crucial resistance, those 2021 highs. For what we could call a “poker of aces” to be confirmed and put on the trading table, where all US indices show strength, we need the Russell 2000 manages to surpass this 2021 ceiling in a forceful way, preferably in a monthly close, something that both the S&P 500, the Dow Jones Industrial and the technology companies already did months ago. Nasdaq. If so, we would be facing a very favorable sign for 2025, reinforcing the strategy that consists of taking advantage of 10% corrections in the indices as wonderful purchasing opportunities. If this happens, I will resume the search for opportunities among these disruptive companies, but all in due time.
In the meantime, my attention will be focused on other types of opportunities: the “blue sapphires”, as I usually call the stocks that aspire to be part of the next review of the fund Tressis ECO 30 Walletadvised by theEconomist. Although only a few stocks will be selected to join this fund, I will explore and look for investment opportunities among the rest of the blue sapphires that, although they do not enter this review, stand out for being exceptional companies in terms of fundamentals and recommendations, some of which are the best in their sectors.
In this first article, I am going to focus on the “blue sapphires” of the automobile sector and its components, a sector that has been deeply shaken by the emergence of China, whose leadership and competitiveness have changed the rules of the game. The pressure exerted by the Chinese advance has broken the market, generating a scenario of uncertainty for European and North American companies. Personally, until the picture becomes clearer, I prefer to remain cautious regarding this sector outside of China. However, it is precisely in the punishment suffered by these companies, which until now led the sector in the West, where some of the most interesting investment opportunities could be found. For this reason, I consider it essential to carry out an exhaustive analysis of these companies to identify those that could resist and adapt to the challenges of the global market.
Volkswagen
Volkswagen faces a challenging context, especially due to pressure from Chinese manufacturers in the electric market, where the German company is trying to regain ground. With ambitious investment plans in electrification and software, VW seeks to consolidate its transition towards more sustainable mobility, although it still must overcome key competitive and regulatory challenges in Europe and China.
Months ago I decided to remove this stock from the list of recommendations ecotraderwhich is the one that serves subscribers of ecotrader to search for members of your portfolio with a medium and long-term orientation. I did it to avoid the possibility that the VW price was heading towards the lows of 2020, during Covid crash around 75-80 euros. Well, the price is already a stone’s throw from this important long-term support, which is what has stopped the falls during the last three decades, specifically in 2011, 2015 and 2020. We will have to see if This support of 75-80 euros works again, stopping the downward trend that is imposed from 240 euros. If I detect any technical evidence that suggests seller exhaustion, I would be in favor of recommending buying Volkswagen shares again.
renault
Renault also faces a complex panorama, marked by Chinese competition and the transition to electric vehicles. The company seeks to reposition itself with a strategy of alliances and affordable electric models to gain ground in the European market.
Technically, it has not done as badly as Volkswagen, since the shares of the title are light years away from the lows of 2020. This strength is what I like and should not scare you, as soon as you doubt where to invest your money the ideal is always focus on strong values. Buy weakness, except in cases like Volkswagen, that are close to such important long-term supports, usually do not go well.
Renault’s price has sought short-term support in the bullish trend that has been guiding the increases from the 2020 lows, which currently run at 36 euros. With a stop at this level I don’t mind buying the title, especially if it manages to overcome resistances of 44-45 euros, which would confirm a bullish turn pattern from that guideline. We would look for new rising highs on those that marked months ago at 54.70 euros and then increases towards the highs of 2018 at 86 euros. Until then there is a potential of 115%.
Pirelli
Pirelli, benchmark in the tire sector premiumfaces a delicate situation due to increased global competition, especially from Asian manufacturers. Its focus on innovation and sustainability, with high-tech and efficient products, is key to maintaining its leadership in high performance segments. The company continues to adapt to the demands of electric and connected mobility, essential for its future growth.
The Pirelli price has corrected the 38.20% Fibonacci of the entire previous rise from the 2022 lows, which coincides with the bullish trend that has been guiding the increases since then. With stop at 4.85 euros It doesn’t seem bad to me to buy looking for increases towards the highs of 2018 around 6.80 euros. Until then there is a potential of 30%.
Daimler Truck Holding
Daimler Truck Holding, one of the world’s largest truck manufacturers, is driving its transition towards electric and hydrogen vehicles in an effort to lead sustainable mobility in heavy transport. The company faces challenges of costs and technological adaptation in a demanding and competitive market. Its commitment to innovation and strategic partnerships could consolidate it in the global zero-emission truck industry.
Technically, it would only catch my attention if its price corrects towards the 32-34 euro area. In that case, driving a stop At 29.80 euros, I could consider buying this title. Otherwise, I wish you a good trip.
Continental
Continental, a leader in automotive technology and components, is diversifying its offer to adapt to a sector in full transformation towards electric and autonomous mobility. The German company, which produces everything from tires to advanced driver assistance systems, faces significant pressure from Chinese competition and the volatility of global markets. Continental seeks to strengthen its presence in digital and sustainable solutions, with a large investment in R&D focused on software and electrification. This focus on innovation is key to maintaining its competitiveness in an increasingly disruptive market.
Technically, I have left this company for last, not because I don’t like it, but because it is the one that could most clearly open a purchasing window. If it manages to beat 63 euros, I recommend buying looking for a context of increases towards first objectives in the 80s and then 120 euros. If it does not exceed 63 euros, the real Christmas gift would be if it loses ground to 38-40 euros in the coming months. I would buy there without hesitation.
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