To take advantage of this, I plan to add some money to my SIPP in February to buy the following share.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Massive pullback

The stock is Ferrari (NYSE:RACE), which has fallen 34% since hitting a July peak. This is one of its largest downturns since listing in 2015.

There are two things worrying investors. First, President Trump recently threatened a new round of tariffs on Europe, before walking them back. As Ferrari makes its cars in Italy, this has caused a bit of uncertainty (the stock’s down 8% year to date).

The major concern though relates to the luxury carmaker’s Capital Markets Day in October. Back then, management said it was targeting revenue of at least €9bn by 2030, implying a compounded annual growth rate of around 5%.

Operating profit’s expected to grow at 6% over this time, reaching €2.75bn. While that would translate into an incredible margin of at least 30.5% — unheard of in the automotive industry — the growth rate disappointed the market. It’s well below Ferrari’s historical average.

Compounding matters was the stock’s premium valuation. Put simply, investors have become less willing to pay up for slowing growth.

So why am I bullish?

Having followed Ferrari as a shareholder for many years now, my strong suspicion here is that management’s being ultra-cautious with this guidance. Three things make me believe this.

One is that Ferrari has a history of setting conservative targets only to crush them. For example, the firm’s on track to hit, or exceed, its previous 2026 profitability goals – set back in 2022 – a full year early.

Second, this plan covers a five-year period (2026-2030). When setting targets half a decade out, especially given the volatile geopolitical environment, management said it’s prudent to bake in some conservatism. 

Finally, there’s no indication that ultra-wealthy customers are turning away from the brand. Quite the opposite. All 799 units of the limited-edition F80 immediately sold out, even with a base price of around €3.6m a car. The overall order book extends well into 2027.

All this leads me to believe that Ferrari will beat these targets, which I think will become obvious to investors before 2030. In the meantime, the company’s begun repurchasing shares as part of a five-year €3.5bn buyback plan. 

A high-quality compounder

Of course, I could be wrong. A breakdown in trading relations between the US and Europe could impact earnings and sentiment. Meanwhile, the stock’s trading at 29 times forward earnings, so it still isn’t conventionally cheap. This adds another element of risk.

However, Ferrari’s a high-quality compounder that I want to remain invested in long term. It has industry-leading margins, a durable luxury brand, loyal super-rich clients, and truly extraordinary pricing power.

Finally, it’s worth noting that analysts have a target price of $453, which is 35% higher than the current level. This is a rare mismatch.

As such, I intend to take advantage of the 34% dip in February and I reckon long-term investors should also consider doing so.

The post 1 luxury stock I’m doubling down on in my SIPP in February appeared first on The Motley Fool UK.

The last time it reported an annual adjusted profit was in 2018. Not surprisingly, the stock’s fallen in value by 99% since IPO.

On the other hand…

In contrast, Ferrari (NYSE:RACE) has seen its share price rise by over 250% since October 2018. Unlike the British sportscar maker, the Italian legend has been able to make cars profitably.

And a look at the results for the two companies for the nine months ended 30 September illustrates how different their financial performances have been so far this year.

Ferrari has sold nearly three times more cars, reported a gross profit margin that’s 23.3 percentage points better, and achieved an average selling price that’s nearly twice as high. But most importantly of all, it reported a pre-tax profit per car sold of around £131,500 compared to a loss of £75,500 for Aston Martin.

However, despite this, Ferrari’s share price has struggled in recent weeks.

What’s wrong?

In October, it told investors that revenue for 2025 was likely to be €7.1bn and that EBITDA (earnings before interest, tax, depreciation, and amortisation) would be around €2.7bn. Both of these were higher than analysts were expecting.

But looking ahead to 2030, the ‘experts’ were apparently disappointed with the company’s forecasts of sales and earnings of €9bn and €3.6bn respectively.

Also, by the start of the next decade, electric vehicles are now expected to account for 20% of all Ferrari sales, compared to the 40% previously stated. Since these announcements, the group’s share price has fallen nearly 13%.

Indeed, a 13% improvement in earnings over five years isn’t particularly impressive.

Both Ferrari and Aston Martin are suffering from a downturn in the luxury goods market. Incomes are under pressure and Trump’s tariffs are hurting sales in North America, which accounts for around 30% of each brand’s sales. Also, switching to electric vehicles is expensive and technically challenging.

Could do better

However, I reckon Aston Martin could improve its result at a faster rate than Ferrari. Like its rival, it makes some beautiful cars and its brand is recognised across the world. Don’t get me wrong, I’m not expecting it to be profitable any time soon but I think its cost-cutting initiatives and upcoming new car launches could see its bottom line improve quicker.

Importantly, its vehicles are cheaper, which could be an advantage in a difficult market.

Significantly, the group’s currently (14 November) valued at 2.9 times adjusted EBITDA compared to a multiple of 25.8 for Ferrari. Suddenly, the British group looks much more attractive.

However, Aston Martin might not be a public company for much longer. According to the Financial Times, its chair is in talks with Saudi Arabia’s sovereign wealth fund to take the group private. This could be further evidence that the sportscar maker is seen as offering good value.

Even so, I like the companies I invest in to be profitable or, at least, able to demonstrate a clear path to being in the black. Unfortunately, Aston Martin meets neither of these criteria. As for Ferrari, its stock is too expensive for my liking.

The post Does the Ferrari or Aston Martin share price offer better value? appeared first on The Motley Fool UK.

Should I now sell? Let’s discuss.

Investor update

The culprit for the sell-off was the luxury carmaker’s Capital Markets Day event. In this, management set out its guidance for 2030.

By then, it expects net revenue of €9bn and at least €2.75bn in operating profit (30%+ margin). That will be up from this year’s €7.1bn and €2.06bn (29%), respectively.

Growth is expected to come from a richer product mix, limited-edition models, and higher personalisation revenue, supported by steady racing and lifestyle income. 

Ferrari plans to launch an average of four new cars per year. And it’s on track to start deliveries of its first full-electric model (Elettrica) by the end of 2026. This EV will have a range of more than 530km (329 miles).

Looking ahead, the company plans to return €7bn to shareholders between 2026 and 2030. This includes €3.5bn in dividends (with the payout ratio raised from 35% to 40%), and €3.5 bn in share buybacks, beginning 2026.

So what’s the problem?

There appear to be three issues here. Firstly, Ferrari was originally aiming for 40% of total sales to be EVs by 2030. Now, it has cut that to 20% due to lacklustre demand for electric sportscars among the super-rich.

Second, the financial guidance for 2030 was weaker than expected. Wall Street was collectively anticipating more like €9.8bn in revenue, with higher profits. Ferrari is normally very predictable, so this will have spooked investors.

Finally, the stock was very highly valued prior to this dip, at around 40 times forward earnings. So it was priced for perfection, and this guidance wasn’t perfect. Therefore, the sell-off makes sense.

Will I sell?

In my opinion, Ferrari’s biggest challenge/risk remains the EV transition. It reportedly plans to sell EVs at higher price points. The Elettrica is expected to cost at least €500,000 before personalisation, according to Reuters. Presumably, this is why the 2030 figures are lower than expected (it will now sell fewer EVs).

Stepping back, I’m not too worried. In fact, I’m glad the EV strategy has been modified. Customers likely pay up to hear the engine’s full-throated roar, not the “unique characteristics of the electric powertrain“.

Meanwhile, demand still far outstrips supply, with the order book stretching well into 2027. This underpins pricing power. Active clients now total 90,000 (20% higher than 2022).

This incredible quote from the firm sums up the brand’s longevity (and scarcity): “Since the company’s founding, Ferrari has produced approximately 330,000 vehicles, over 90% of which are still in existence today and require our constant care.”

Nowadays, all Ferraris are uniquely personalised. Leaning into this, it will open two ‘Tailor Made’ centres in Tokyo and Los Angeles in 2027.

It’s also worth mentioning that Ferrari has achieved its previous profitability targets for 2026 one year in advance. I strongly suspect this will happen again by 2030. Guidance looks conservative.

For these reasons, I’m not selling. Indeed, with the stock now trading at 33 times 2026’s forecast earnings — versus the 10-year average of about 40 — it might be worth considering.

If it keeps falling, I’ll invest more money.

The post Down 18% in days! Should I sell this luxury brand in my Stocks and Shares ISA? appeared first on The Motley Fool UK.

By contrast, Ferrari assembles its exquisite sportscars in a quiet town in northern Italy. It’s run by a professorial CEO who’s pretty low-key, and the firm isn’t interested in robotaxis, humanoid robots, or Dojo supercomputers.

As exciting as these Tesla ventures are, I’m backing Ferrari over Tesla in my portfolio. Here’s why.

Iconic brand

Let’s start with the brand, which is unrivalled, in my opinion. Ferrari deliberately limits production to under 15,000 vehicles a year to promote scarcity and exclusivity. For context, Porsche delivered more than 20 times that amount last year (over 300,000).

This stays true to the strategy of the founder (Enzo Ferrari), who said the firm will always deliver “one less than the market demands“. It has also been deliberately limiting sales to China, so as not to overexpose the brand there yet. China can wait.

I mean, what other company does that? Tesla attempts to sell as many cars as possible in China, as does Porsche and nearly all other automakers.

Unfortunately, I fear Tesla’s brand has genuinely been damaged in recent years by Musk’s toxic foray into politics. Look at the resale value of a Tesla, which has fallen sharply over the past 18 months, whereas Ferrari’s remains strong.

Incredible pricing power

If I want to buy a new Tesla, I can just log on the app and place an order. Not so a Ferrari. Around two-thirds of new vehicles are sold to existing customers (very rich ones, including billionaires).

The upshot of this powerful dynamic is that Ferrari has enormous pricing power. It can keep volumes low and still grow profits.

Again, by contrast, Tesla’s struggled here. It’s suffering from falling electric vehicle (EV) sales despite repeatedly lowering prices, whereas Ferrari’s order book extends over two years.

We always want to push the quality of revenues over quantity.

Ferrari CEO Benedetto Vigna.

Financials

Turning to the numbers, Tesla’s automotive revenue last year fell 6% to $77.1bn, though overall revenue rose 1% due to strong growth in its energy business. Profitability dropped sharply.

The Italian automaker’s annual revenue grew 11.8% to €6.7bn, with everything else up double digits, including earnings per share (+22.6%). Margins are industry-leading and Ferrari also pays a modest but growing dividend.

Valuation

In reality, neither company’s valued as a run-of-the-mill car manufacturer. Tesla’s seen as a tech/AI company, and could be worth considerably more if it can eventually capture a big chunk of the global robotaxi market.

If it can’t, the stock’s price-to-earnings (P/E) ratio of 184 is likely unsustainable, as Musk has warned.

Meanwhile, Ferrari’s valued as an ultra-luxury goods firm, which is reflected in a forward P/E ratio of 46.

The risk with this premium is that investors demand perfection. If Ferrari’s margins disappoint when it reports Q2 earnings today (31 July), investors might sell.

Also, Ferrari’s first fully electric car is upcoming. Were that to flop, it could damage the brand and cast doubt on the EV strategy.

However, despite the high valuation, I believe it’s worth considering, especially on dips (I’m hoping for one myself). The wealthier some get, the more Ferrari stands to gain.

The post Why I’m betting on Ferrari over Tesla stock appeared first on The Motley Fool UK.

Here are three holdings I expect to do well over the next decade. As such, I think they’re worth considering.

Pricing power

Let’s start with one powerful trend that’s ongoing: the rise of the world’s super-rich. According to Oxfam, the number of billionaires jumped 7.3% last year to 2,769. Multimillionaires are also increasing, especially in Asia.  

This is an incredibly supportive backdrop for luxury carmaker Ferrari (NYSE: RACE). Last year, the firm shipped just 13,752 cars, with roughly 81% of those going to existing Ferrari clients, and nearly half to buyers who already owned more than one Ferrari. 

The company deliberately limits production to maintain brand exclusivity. This has two powerful consequences. First, it gives Ferrari enormous pricing power. With demand far outstripping supply, it can raise prices, while still keeping first-time customers waiting in line.

Second, ultra-wealthy collectors create an incredibly resilient customer base. That makes the business less exposed to economic downturns.

One risk worth highlighting is that Ferrari has just postponed the timeline for its second EV model due to a lack of customer interest. If customers aren’t happy with the first Ferrari EV in 2026, this could harm the brand’s image.

Like its cars, Ferrari stock is far from cheap. But I think it will head higher by 2035 as aspirational multimillionaires multiply.

Robotaxis

Sticking with the car theme, we have Uber (NYSE: UBER). In Q1, trips grew 18% year on year to 3bn, while monthly active customers rose 14% to 170m.

Over the next decade, I expect driverless taxis to go mainstream. Google’s Waymo is now doing over 250,000 paid robotaxi rides a week in a handful of US cities, taking the total to more than 10m. But there are dozens of other autonomous vehicle start-ups.

Rather than spend millions marketing their own apps, I expect most to tap into Uber’s vast existing global network. Many have already signed partnerships, including Waymo in some cities.

One that hasn’t, though, is Tesla, which is tentatively launching its own robotaxis right now in Austin, Texas. Were Tesla to succeed, this could be a direct threat to Uber’s competitive position, at least in the US.

However, if robotaxis successfully scale up, there’s a chance that Uber becomes more profitable, given that drivers are its biggest cost today.

War on cash

I want to end with a more obvious unstoppable global trend, which is the shift towards digital payments. Whether it’s smartphones being used in the real world or for shopping online, the war on physical cash is relentless. 

One obvious beneficiary is Visa (NYSE: V). In its last fiscal year, there were nearly 234bn transactions processed on its networks, up from 192.5bn two years before. And people spent a whopping $13.2trn using Visa cards worldwide!

Given that Visa takes a small cut of all the action, the firm is incredibly profitable. Its net margin sits comfortably north of 50%.

We’re seeing the digital payments trend now spreading to Africa, Latin America, and the wider Asian region. Barring regulatory intervention in Visa’s business, which is a key risk, I expect the stock to be much higher in 2035 than it is now.

The post Over the next 10 years, I think I’ll make money from these 3 stocks in my ISA appeared first on The Motley Fool UK.

Over the long term, both have been cracking investments. The Tesla share price is up 1,651% across a decade, while Ferrari has delivered a 746% return since it went public in late 2015.

In my own portfolio, I own Ferrari stock but not Tesla (though I have been a shareholder in the past). Here, I want to take a look at how both firms have been doing recently.

Recent share-price performance

Let’s start with the share prices so far this year. Tesla’s is down 31.6% while Ferrari’s is up 12.2%. So, over this short time frame, the latter is easily winning the race.

However, it hasn’t been a totally smooth ride for the Italian carmaker as its shares fell nearly 22% between late February and early April. This was largely due to President Trump’s on-off tariff policies, which have sent shockwaves of uncertainty through the stock market.

Results

Next, let’s consider how both firms got on financially in the first quarter (Q1). This is where some major differences emerge.

For Tesla, it has been contending with weak sales, fierce competition, and some brand damage from CEO Elon Musk’s outspoken views on various issues. These challenges were reflected in the results.

Revenue fell 9% year on year to $19.3bn, with global deliveries dropping 13% to 336,681 vehicles. Operating profit slumped 66% to $399m, resulting in a 2.1% margin as Tesla continued to invest heavily in robotics and artificial intelligence (AI). All these figures were worse than expected.

By contrast, Ferrari posted some impressive Q1 numbers earlier this week (6 May). Revenue increased 13% to €1.8bn, while net profit jumped 17% to €412m. Both figures were slightly higher than expected. The operating margin came in at 30.3%!

What’s amazing is that Ferrari achieved this growth without really increasing production. Shipments edged up just 0.9% to 3,593 cars, yet there was double-digit growth across the board.

This small shipment increase was deliberate rather than due to weak demand. In fact, Ferrari’s order book now extends into 2027!

The secret sauce is incredible pricing power combined with continued high demand for lucrative vehicle personalisations. Unfortunately, Tesla’s pricing power has waned significantly as it competes with low-priced Chinese EV makers worldwide.

Different beasts

In reality, neither is valued as a bog-standard car stock. Tesla’s massive $865bn market value is based on future growth potential in AI-powered robotaxis and humanoid robots. Therefore, while it’s struggling now, its growth could accelerate in future.

The risk is that the stock’s trading at 152 times earnings, meaning it may fall substantially if its AI/robotics ambitions don’t start bearing fruit over the next couple of years.

Meanwhile, at 47 times earnings, Ferrari is valued as a leading ultra-luxury goods company. But it has warned that US tariffs on EU-made cars could hurt profitability this year. So this is a risk.

Tesla stock is only suitable for investors with a very high tolerance for risk. Ferrari is less risky but still a bit pricey.

Personally, I’m happy with my choice and intend to keep holding Ferrari for years.

The post Tesla vs Ferrari: which stock is leading the race in 2025? appeared first on The Motley Fool UK.

American exposure

In terms of volume, 32% of the British icon’s 2024 sales were made through dealers in the Americas. Although a breakdown of vehicle sales by country isn’t available, we do know that £591m of revenue (37.3%) came from the United States.

Proportionately, this is slightly more than some of its rivals, but it’s not massively different. For example, Ferrari (NYSE:RACE), generated 28.8% of its top line in America.

But setting aside the recent uncertainty surrounding import taxes, the share price of Aston Martin’s rival has performed much better.

This makes me think investors have more concerns than just tariffs. And a look at the 2024 accounts for the British and Italian car makers is illuminating. It’s a bit like comparing oil and water.

Getting into the detail

Aston Martin sells fewer cars than Ferrari and, concerningly, the gap between the two is growing.

Also, the Italian sports car maker commands a higher average selling price and gross profit margin. In my opinion, this is a strong indication that its models are seen as being more desirable. In theory, this means it should suffer less from Trump’s tariffs.

However, to strengthen its balance sheet, the British marque has recently secured additional investment from its largest shareholder. Also, prior to Trump’s announcement, it was expecting a better 2025, largely on the back of the first deliveries of its new Valhalla model.

And at the time of announcing its 2024 results, the company reconfirmed its medium-term targets. By 2028, it aims to have annual revenue of £2.5bn and a gross profit percentage in the ‘mid-40s‘.

What I think

But despite its beautiful cars, amazing brand and loyal customer base, I don’t want to invest in Aston Martin. It may have a price-to-book (PTB) ratio of less than one but it remains loss-making. Since floating in October 2018, it’s reported losses of nearly £2bn. And it’s a long way from selling enough vehicles to be profitable. In these circumstances, it’s difficult to value a company, and I wouldn’t be surprised if the stock had further to fall.

The company also appears to be lagging some its peers when it comes to fully electrifying its range. Its first full EV isn’t expected before 2030. BY contrast, Ferrari’s is due to be launched later this year. Having said that, the UK government has just announced plans to let smaller manufacturers continue to produce petrol cars beyond the current 2030 deadline, so that should help ease the pressure to ‘go green’.

However, despite the Italian company’s faster transition to EVs — and its superior financial performance — I don’t want to buy its stock either.

Its shares currently change hands for an eye-watering 44.7 times its 2024 earnings per share (EPS) of €8.46. For 2025, analysts are expecting EPS of €9.11. Even so, this implies a forward price-to-earnings ratio of 41.5. And it has a PTB ratio of over 17.

A bit like its fabulous cars, this is far too expensive for me.

The post Car-mageddon! The Aston Martin share price has tanked 30% in a month appeared first on The Motley Fool UK.

No, Ferrari is valued as an ultra-luxury brand. This is why the stock is often ranked among peers like Hermès International and LVMH (Moet Hennessy Louis Vuitton) rather than grubby carmakers like Stellantis and Ford.

While the stock has raced 185% higher in five years, it’s fallen 16% in just over a month. This pullback has prompted analysts at both Barclays and ​Kepler Cheuvreux to upgrade Ferrari stock to Buy from Hold.

Barclays said the company retains relative “safe-haven” status compared to other European automakers hit by US tariffs. Starting on 2 April, Ferrari will hike prices by up to 10% on some models in the US. This demonstrates the company’s pricing power.

Meanwhile, Kepler said: “This is the pit stop we were long awaiting to turn more positive.”

But should I buy more shares on the dip?

Safe haven

For starters, I agree that Ferrari stock is somewhat of a safe haven. President Trump’s 25% tariffs on auto imports aims to encourage more US car manufacturing. But Ferrari exclusively manufactures its supercars in Maranello, northern Italy, and that won’t be changing.

Customers value the fact that the cars are largely hand-assembled in the same historic factory in Italy. This craftmanship and heritage is an important part of the brand’s appeal.

Meanwhile, the company limits production to maintain exclusivity. As a result, the order backlog extends into early 2027 due to incredible demand.

In other words, you can’t just go out and buy a new Ferrari, even if you have the money. And existing owners have a far better chance of securing limited-edition models than newbies.

The result is extraordinary earnings visibility, which investors value highly. As long as the order book extends two years into the future, I think the stock will carry a significant premium to the wider market.

Of course, we can grumble about how large that premium should be, but the fact the company deserves one is hardly in doubt. Right now, the forward price-to-earnings ratio is 43, which is lower than a few months ago (just over 50).

Marginal margin pressure

Last year, revenue rose 11.8% to €6.7bn. Shipments totalled 13,752 units, up just 1%, yet net profit jumped 21% to just over €1.5bn. 

The main risk I see is some sort of damage to the brand. Ferrari takes incredible care of its reputation, but no brand is entirely immune.

It’s also worth noting that management sees a potential 50 basis point hit to margins this year due to tariffs. Then again, Ferrari’s operating margin was 28.3% last year, so it has a fair bit of flexibility.  

My move

Whether we’re comfortable with it or not, the rich are getting richer around the world. And that is undoubtedly a very supportive trend for ultra-luxury brands like Ferrari.

I already have a somewhat large position across my ISA and SIPP. The 16% dip isn’t large enough to justify me making it even bigger.

But for investors wanting to invest in the rising global wealth theme, I think Ferrari stock is still worth considering as a long-term holding.

The post Down 16% in a month, is this ultra-luxury stock now a no-brainer buy for my ISA and SIPP? appeared first on The Motley Fool UK.

The American owners

Personally, I rue the day that Formula One Group, a subsidiary of Liberty Media, got its hands on the commercial rights for F1 racing. Since 2017, it’s transformed the sport, leveraging Netflix‘s Drive to Survive to captivate a global audience. But it’s come at the expense of traditionalists like me.

The series, offering behind-the-scenes access and humanising drivers and teams, has attracted younger fans and boosted F1’s popularity, especially in the US. This strategic move expanded commercial opportunities, increased race attendance, and diversified viewership, cementing F1’s modern resurgence.

However, would-be investors need to pay a premium to buy the stock. It’s currently trading at 46 times forward earnings, with earnings growth pointing to a price-to-earnings-to-growth (PEG) ratio around 1.8. This indicates the stock could be significantly overvalued.

A PEG ratio below one typically signals value. Nonetheless, investors could point to the limit coverage — only two analysts provide earnings forecasts — and the recent takeover of MotoGP, where it will hope to replicate its commercial success with F1.

Scuderia Ferrari

Luxury Italian car manufacturer Ferrari owns the F1 team Scuderia Ferrari, perhaps the most prestigious team in the sport. While success has been hard to come by in recent years, developments at the racing team can have an outsized impact on the Ferrari share price. In fact, the early 2024 announcement that Lewis Hamilton would be joining the team resulted in the shares jumping 20%. And they’ve remained expensive.

However, Ferrari stock, which is mainly valued according to the sales of its cars and other retail and service activities such as Ferrari World, is expensive. In fact, with the exception of Tesla, Ferrari is the most expensive car company. The stock trades at 45 times forward earnings, but with just 10% annualised earnings growth in the forecast.

Struggling Aston Martin

Aston Martin F1 isn’t owned by the company that makes the road cars, although the brand name and Lawrence Stroll connect the two. Interestingly, the stock surged two years ago when driver Fernando Alonso demonstrated that its F1 car for the season was very competitive. The apparent connection being that strong track performance could raise the brand’s profile further.

However, the momentum was short-lived. Off the track, the Aston Martin company and the stock are struggling. Shares in Aston Martin Lagonda plummeted in February as the luxury carmaker announced plans to cut 5% of its global workforce to save £25m annually, with half realised in FY 2025. 

The business also announced that pre-tax losses for the year widened to £289.1m. Meanwhile, revenue fell 3% to £1.58bn, and wholesale volumes dropped 9% to 6,030. The company also delayed its first electric vehicle (EV) launch to the late 2020s. 

Despite these challenges, Aston Martin aims for an improved financial performance in 2025, targeting positive adjusted EBIT and free cash flow in H2 2025. CEO Adrian Hallmark emphasised operational execution and financial sustainability as key priorities for the company’s turnaround.

Actually, out of the three companies on this list, Aston Martin is top of my watchlist. However, there’s too much risk to buy today.

The post Stocks to watch ahead of the Formula 1 season opener appeared first on The Motley Fool UK.

You make my heart beat faster, Ferrari

“Dear Ferrari shares,

“From the moment we met in 2022 and I welcomed you into my portfolio, I knew this was no ordinary investment. 

“At first though, I hesitated. You traded at a price-to-earnings multiple of 36, and some called such a valuation too racy. But I saw it differently. Extreme quality demands a premium and you, oh Prancing Horse, are the very definition of ultra-luxury. 

“You have more than doubled in value since we entered into our relationship — so we have had the last laugh!

“When I glance around at the so-called competition – ahem, Aston Martin – I feel no urge to stray. Those ravishing red supercars from Italy still turn heads everywhere they go. And I see them holding pole position for decades to come.

“Some shares I’ve been with have proven to be a flash in the pan with no staying power. But you are in a class of your own. Year after year, you deliver truly exceptional margins, steady revenue growth, and a brand so powerful that demand never falters — recession or not.

“While others chase mass production – selling to every Tom, Dick, or Harry – Ferrari keeps output tight. This maintains desirability and an insatiable demand, underpinning extreme pricing power and profits. The net margin was a stunning 23% in 2024!

“What was it founding father Enzo once said? Ah yes: “Ferrari will always deliver one less car than the market demands”. Sometimes less truly is more.

What about our future?

“Naturally, even the best thoroughbreds can eventually grow old and lose their edge. Perhaps pricing power and profit margins are pushed to the absolute limit, hurting the brand in the process. Perhaps the premium value is too high and you end up stalling in my portfolio. In that case, it might be time for us to… sob… part ways.

“As things stand though, I can’t imagine us splitting up. The Daytona SP3 hypercar starts at $2.2m before personalisation options, while the F80 costs around $4m. And the first all-electric supercar is due to go on sale in 2026 at a rumoured $500,000.

“Between 2023 and 2026, 15 new vehicle models will have roared out of the iconic factory gates in Maranello. This fresh line-up is expected to help annual earnings grow at low double digits over the next few years.

“Meanwhile, the order book is at record levels, with a significant backlog. They say money can’t buy you happiness, but it can buy you a Ferrari. And have you ever seen a sad-faced owner experiencing the spine-tingling V12 at full throttle? Me neither.

“Indeed, are you even a billionaire these days if you don’t own a collection of Ferraris?!

“Looking back on our time together, I’m very happy with how things turned out. As for the future, I’m sure there will be speedbumps along the way, and I don’t expect another doubling of the share price anytime soon. But I think we will get through any challenges to even more prosperous times down the road.

“All my love,

“Ben“

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