Real Madrid Fans: Buy Adidas?

The stock is currently overvalued

Ruth Saldanha 7 July, 2021 | 3:41AM
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Ruth Saldanha: Real Madrid is a soccer team. Let's guess where it's based. Yep, Madrid.

Fernando Luque: As you can see, I'm Real Madrid fan, and I can guarantee you that we will win the European Champions League. Hala Madrid.

Saldanha: Well, you're clearly invested in this, and I hope Real Madrid wins. But do you think you could invest in the team another way? Maybe you could buy Adidas, one of their main sponsors. And if you did, would you be a champion? Adidas is a leader in athletic apparel. Its stock is trading way above our fair value estimate. It has a narrow economic moat.

David Swartz: Adidas is the world's second largest athletic apparel and footwear company, trailing only Nike. We assign a narrow moat to Adidas on the strength of its brand intangible asset. The firm sponsors many leading athletes, teams and leagues and has significant share in all major markets. We currently view Adidas as very overvalued with just a 1-Star rating. Our fair very estimates are €197 on its German shares and $116 on its shares that trade in the United States.

Saldanha: If you want to invest in Real Madrid via Adidas, wait for a dip before you buy and then you might end up a champion, too.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
adidas AG390.00 USD0.85
adidas AG ADR193.01 USD2.58Rating

About Author

Ruth Saldanha

Ruth Saldanha  is Senior Editor at Morningstar.ca. Follow her on Twitter @KarishmaRuth.

 
 
 

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