The DAX index has continued to fire on all cylinders this year as it surged to its all-time high this week. It jumped to a high of €23,100, bringing the last twelve-month gains to 32% and the year-to-date high performance to 16%. This means that the index has beaten its American peers like the Nasdaq 100 and S&P 500.
Rheinmetall’s stock leads the DAX index in 2024
Most DAX index constituent companies are doing well this year, with only six constituents being in the red.
Rheinmetall, a leading German industrial giant, has become the best-performing company in the index. Its stock is up by 95% this year and by 180% in the last 12 months. It has jumped by over 2,450% in the last decade, making it the top gainer in the DAX index over the years.
The strong Rheinmetall share price surge has transformed it into a €53 billion juggernaut and the 12th biggest company in Germany.
For starters, Rheinmetall is one of the biggest companies in the defense industry. It builds products that are used by militaries in Europe, North America, and other countries.
Rheinmetall operates its business in five key divisions: vehicle systems Europe, Vehicle Systems International, Weapon and ammunition, electronic solutions, and power systems.
Its top products are ammunition, tactical vehicles, logistic vehicles, propulsion systems, protection systems, and power generators.
Rheinmetall stock price has surged as investors reacted to the ongoing trends in geopolitics under Donald Trump. Trump has called on European countries to shoulder the burden by increasing their defense spending.
Read more: These DAX index companies are firing on all cylinders
Most European leaders have also expressed concerns that the United States is unreliable and that they should boost their spending.
Just this week, Germany shocked the market by announcing that it would loosen its fiscal chains and transform the defense spending. Its goal is to spend over €500 billion in the next few years to modernize its defense sector.
Emmanuel Macron has also called on Europe to raise its national army to bolster its defense against Russia.
All these factors have played in Rheinmetall’s favor as the company is expected to receive more orders in the coming months.
Read more: Rheinmetall stock jumps as Europe boosts defense spending
Growth momentum is continuing
The most recent financial results showed that Rheinmetall’s business was doing well as demand rose. Sales rose by 40% to €2.45 billion, while the operating margin jumped to 12.3%. A 40% annual growth for a company like RHM is a good thing since these metrics are often common among new tech names.
The company’s business continues to receive huge orders, which has pushed its order backlog to over €50 billion.
Rheinmettal expects that its annual revenue for 2024 was €10 billion, a big increase from the €7.2 billion it made a year earlier. Its margins are also expected to keep growing, helped by its strong scale. The operating margin will be about 15%, higher than the 12.8% it made a year earlier.
Rheinmetall share price analysis
The weekly chart shows that the Rheinmetall stock price has been in a strong surge in the past few years. It has continued to cross major resistance levels in this period. For example, it recently rose above the key resistance level at €1,000.
The stock has remained above all moving averages, a sign that the momentum is gaining steam. The Average Directional Index (ADX), a popular indicator that measures the strength of a trend, has risen to 44.
However, the stock has become highly overbought, with the Relative Strength Index (RSI) and the Stochastic RSI moving to the extreme overbought level. Therefore, the stock will likely pull back, and possibly retest the support at €1,000.
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