A few days ago, Deutsche Telekom shares reached a long-term high. With bonus certificates with a cap, investors can also generate high returns if the share does not continue to soar.
With a price increase of six percent over the past month, the Deutsche Telekom share is one of the strongest DAX stocks for this period. After the share reached a 12-month high of EUR 19.31 on June 1, 2022 and at the same time its highest level for many years, it was not quite able to maintain the high level afterwards.
Because of the pending increase in the offer for the sale of the radio tower business and the solid business figures, analysts with price targets of up to 26 euros (UBS) confirmed their buy recommendations for the T-Share.
The investment idea
Anyone considering an investment in Deutsche Telekom shares, which are still classified as slightly undervalued, should by no means rule out the possibility of a sustained correction after the sharp rise in the price over the past few months. Thus, now could be a suitable time to invest in bonus certificates with a cap, which allow for high return opportunities even if the Deutsche Telekom share price corrects significantly.
Apart from dividend payments, private investors can only achieve positive returns when buying a share directly if the price rises. Compared to direct share purchases, bonus certificates with and without a cap offer investors opportunities for annual returns in the double-digit percentage range not only when the share price rises, but also when prices stagnate or fall. How it works: If the Deutsche Telekom share never touches or falls below the barrier of EUR 14.00 by the valuation date of the certificate, then the bonus certificate will be issued on June 23, 2023 with the bonus level of EUR 22.50 repaid.
The key data
The Société Générale bonus certificate with a cap (ISIN: DE000SH1C2V0) on Deutsche Telekom shares has a bonus level and a cap of EUR 22.50. The cap defines the maximum repayment amount of the certificate. The barrier activated until the valuation date, June 16, 2023, is EUR 14. With the Deutsche Telekom share price of EUR 18.37, investors were able to buy the certificate for EUR 20.07.
The chance
Since the certificate is currently available at EUR 20.07, it enables a gross return of 12.11 percent in twelve months if the share price never falls by 23.79 percent to EUR 14.00 or below by the valuation date.
The Risks
If the Deutsche Telekom share touches the barrier of EUR 14.00 by the valuation date, investors will receive one Deutsche Telekom share in their custody account for each certificate. If the allocated shares are sold below the purchase price of the certificate, then the certificate investment will cause a loss.
This article does not constitute a recommendation to buy or sell Deutsche Telekom shares or investment products based on Deutsche Telekom shares. No liability is assumed for the correctness of the data.
