Buy Ferrari Stock

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Buy Ferrari Stock

Is It A Good Time To Buy Ferrari Stock?

Most investors don't like a market that's highly volatile, but that's also where most money is made. In this volatile market, there's one stock worth looking at, and it's Ferrari.

Ferrari (RACE) is considered a luxury stock, but what's impressive is that its stock price is 759% in the last decade. Even now, Ferrari stock is trading just 31% below its peak.

Ferrari's Order Book Is Full

Normally, the automotive industry is not considered a good spot for long-term investment. The reasons for this are low profit, cyclical demand, and huge capital requirements.

But when it comes to Ferrari, most of these things don't even matter. Ferrari is viewed as a luxury brand, and they make supercars for the super wealthy people of the world.

So, even high inflation isn't something that is going to eat away at the demand for Ferrari's cars, as they make the cars for wealthy people in the first place.

The goal of Ferrari is never to sell a lot of cars. In fact, the key goal is to ensure the brand's status is maintained. This allows Ferrari to have incredible pricing power, which is something most car manufacturers don't have.

Ferrari's order book is already full till the end of 2027. So, they will be busy delivering cars to the customers for this and even the next year. Even after that, the waiting list will still be full as people will sign up for a Ferrari car.

That's why the safe option is not to look at the valuation of Ferrari as if it were any other automotive stock. So, even if the Ferrari stock has a high valuation, we must consider how Ferrari operates its business.

Right now, the Ferrari stock is trading at a P/E of 35.2. If we look at the historic valuation of Ferrari, it becomes clear that this P/E is actually very attractive.

On a 10-year average, the P/E of Ferrari has been around 41.1. So, this metric alone tells us that the Ferrari stock price is very attractive for long-term investors.

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