The shares of the world leader in the semiconductor and system solutions industry, Infineon (DE0006231004,) suffered from the weakening automotive industry and lower order intake in the automotive, industrial power control and power & sensor systems sectors. On the other hand, the increasing demand for contactless payment options and smart cards brings new perspectives for the Digital Security Solutions division and thus creates imagination for the share price. The share has already recovered significantly after the Corona crash (low at eleven euros) and is currently trading at the 20 euro mark.
If the Infineon share, which the analysts at Bernstein Research recommends to buy with a price target of EUR 25, will not come under strong pressure again in the next few months, then an investment in a certificate with a security buffer will be worthwhile.
The investment idea: Investors who do not predict a very sharp drop in the Infineon share in the coming months due to the consistently positive future prospects could consider investing in a bonus certificate with a cap. In contrast to a direct equity investment, bonus certificates offer opportunities for disproportionately high returns even if share prices stagnate or fall. The certificate presented below will also provide positive returns if the Infineon share slips by up to 38 percent by the end of 2020.
How it works: If the Infineon share never touches or falls below the barrier of EUR 12.50 by the valuation date of the certificate, the bonus certificate with cap will be repaid on December 28, 2020 at the bonus level of EUR 20.
The key data: The barrier for the HVB bonus certificate with cap (ISIN: DE000HZ9QFW1) on the Infineon share is 12.50. Bonus levels and the cap were attached at 20 euros. The cap defines the maximum payment amount of the certificate. The valuation day is December 18, 2020, and the certificate will be repaid on December 28, 2020. At the Infineon share price of EUR 20.17, investors were able to acquire the certificate at EUR 18.29.
The opportunities: Since investors can currently buy the certificate at EUR 18.29, it will allow gross earnings of 9.34 percent (= 17 percent per year) in the next six months if the share price never increases by 38.03 percent by the valuation date to 18 euros or less.
The risks: If the Infineon share touches the barrier of EUR 12.50 by the valuation day and the share is listed below the cap on that day, investors will receive one Infineon share for each certificate. If the allotted shares are sold below EUR 18.29, the investment – before expenses – will cause a loss of capital.
This contribution does not constitute a recommendation to buy or sell Infineon shares or investment products in Infineon shares. We assume no liability for the accuracy of the data.
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