3 undervalued stocks on the German exchange
The war with Iran has pushed oil back above $100 a barrel and the European Central Bank is raising rates again. Uncertainty is weighing on European stock valuations, but for many companies this doesn't match their results. On the Frankfurt Stock Exchange we can find names that are posting record profits or generous shareholder payouts, yet the market is pricing them well below their fair value.
Key points
For all three stocks, the fair price implies upside of at least 50%.
Three undervalued stocks, but three completely different reasons. One is priced for crisis, the second overlooked for its yield, and the third not trusted for future growth.
A low P/E alone isn't enough. The bigger the discount the market offers, the more important it is to understand what risk the investor is actually being paid to take.
Which type of undervaluation is most attractive today? A crisis discount, a high yield, or growth that will only fully show in the coming years?
European stocks are under pressure again, but company results tell a different story. This very divergence opens up interesting opportunities.
2026 is testing the nerves of European investors. The war between the United States and Israel against Iran, which began on 28 February, has closed the Strait of Hormuz and driven Brent crude as high as $119 a barrel. After a summer ceasefire, September brought a new escalation and Brent closed at $101.21 on 9 September. Eurozone inflation climbed to 3.3% in August, the highest since September 2023. The ECB, which was cutting rates just last year, therefore raised them to 2.25% in June, and at its 10 September meeting the market expected another step to 2.50%.
Such an environment opens a gap between results and valuations. Tourism suffers directly, while banks and insurers actually benefit from higher rates, yet even they trade at a discount to their earnings.
The Frankfurt Xetra exchange offers more than just German companies: shares from France, Austria and other European countries are traded there as well. It is precisely here that one can find names whose valuations significantly lag their results. They come from three different sectors and nicely illustrate that the word 'undervalued' can mean three different things: a crisis discount, a cheap yield, and cheap growth. Which names are they?