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Opportunities from Overseas: US-Underlyings

Friday, 25 August 2023 Reading time : 3 minutes

The world's largest companies are not based in Europe, but direct their activities from the other side of the Atlantic and are listed on the American stock exchanges. If investors from Switzerland invest in this market, they have to take into account possible exchange rate fluctuations in addition to the price risk, but they benefit from the higher interest rate - an important factor for the profile of yield-optimization products; with similar volatilities, the coupons rise with interest rates.

Beverages, snacks and coffee - More exciting than it may sound
It's no secret that Coca-Cola is one of market legend Warren Buffet's favorite stocks - his investment company Berkshire Hathaway holds over 9% of the outstanding shares, making it the largest shareholder. Steady dividend growth and robustness in recessions make the beverage giant's stock popular with defensive investors. The same is true for PepsiCo, probably known in the minds of many consumers as the aforementioned group's biggest rival. YTD, the food and beverage company's stock has actually eclipsed that of its main rival. Meanwhile, Starbucks, probably the world's best-known coffee chain, is reporting attractive growth figures; with over 37% market share, Starbucks is the undisputed market leader in the US.

BRC on Coca-Cola, PepsiCo and Starbucks (USD)

  • 7% coupon p.a., 49% barrier (Termsheet)
  • 11% coupon p.a., 66% barrier (Termsheet)
  • 12 months maturity
E-commerce and brand worth
Amazon is a prime example of the American dream. Starting in a garage - which seems to be the starting point for many US giants - the group is now one of the world's most highly valued companies, with a market capitalization of around USD 1.4 trillion. The stock accounts for more than 5% of the S&P 500 and is thus noticeably represented among investors who have ETFs on the US index in their portfolios. The group's profits are impressive; the online retailer was able to earn USD 6.8 billion in the last quarter, with some upwards momentum. However, it is not only the sellers who are benefiting from the shift to online retailing, but also intermediaries, for example payment providers such as Visa. They also are among the more recession-resistant companies and can achieve good results even in difficult markets. So did Visa; over the last 10 years, profit growth has averaged 11% - despite inflation, Covid-19 and other events. Nike may not have such impressive growth figures, but it has a very strong brand and has been able to outpace rival Adidas in terms of sales growth.
 

BRC on Nike, Visa and Amazon (USD)

  • 12% coupon p.a.
  • 58% barrier
  • 12 months maturity
  • Termsheet
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