Rheinmetall, Argo Graphene Solutions, Vonovia: Three beneficiaries of the EUR 500 billion stimulus package

Rheinmetall – How defense investments are boosting the Company

Germany is investing heavily in defense and infrastructure, and Rheinmetall is a clear beneficiary. Of the first EUR 100 billion in special funds for modernizing the German armed forces, an estimated EUR 30 to 40 billion will go to the Düsseldorf-based company. This means major orders for systems like air defense, military trucks, ammunition, and components for fighter jets. At the same time, the new EUR 500 billion package from the federal government is supporting industry and improving the investment environment. Additional tailwinds are coming from political measures such as accelerated procurement procedures for defense equipment and the new 5% NATO defense spending target. This combination creates planning security.

Internationally, Rheinmetall remains on track for success. The South African subsidiary Rheinmetall Denel Munition recently secured its largest single order to date. A European NATO partner has ordered 155 mm artillery ammunition worth several hundred million euros, which is to be delivered by 2027. Another significant deal followed almost simultaneously. Together with its Norwegian partner Nammo, Rheinmetall is to supply Sweden with artillery ammunition worth a total of over USD 500 million. These major orders highlight the Company's growing importance as a system-relevant supplier to Western armed forces and significantly strengthen its global market position.

Innovation remains a key driver. The portfolio is growing beyond traditional defense equipment. With the SSW40 automatic grenade launcher, Rheinmetall presented a new, ergonomic weapon in 40 mm MV calibre, featuring a range of up to 900 m. At the same time, cooperation with US tech company Anduril is driving forward the development of drones and missile propulsion systems for Europe. The Company is also making its mark in the vehicle sector with the newly unveiled TGS-Mil Protected truck. This diversification strengthens the long-term foundation for growth. The share is currently trading at EUR 1,835.00.

Argo Graphene Solutions – Perfect timing for Germany's infrastructure offensive

Germany is launching an investment offensive in 2025. Over EUR 115 billion will be invested in modernizing dilapidated roads, bridges, and railways, expanding digital networks, and in schools and climate protection technologies. This unprecedented sum, 55% higher than last year, is intended to clear years of renovation backlogs and strengthen competitiveness. Notably, a significant portion of the funds is allocated to climate-neutral and innovative infrastructure solutions. With its focus on optimized concrete and asphalt, Argo Graphene Solutions is right on trend.

The Canadian company, formerly known as Argo Living Soils, has repositioned itself and now operates clearly as a technology provider for graphene-based building materials. Its approach is to use high-purity graphene oxide as an additive for concrete and asphalt to significantly improve properties such as compressive strength and flexural strength. The first 1,000 litres of the special material have already been ordered. A newly opened logistics and mixing center near New Orleans, strategically located near the important port, now enables efficient delivery to the North American market. The goal is to develop marketable products quickly and, at the same time, push ahead with EU certification in order to supply Germany and the EU.

The potential is enormous. Graphene can significantly increase the strength of concrete, extend the service life of buildings, and, at the same time, reduce the need for cement, a major source of CO2 emissions. It is precisely this combination of sustainability and improved performance that is crucial. With a global market for sustainable building materials that could grow to over USD 1 billion by 2032 and Germany's multi-billion-dollar infrastructure push, Argo is well-positioned with its specialization in a highly relevant field of the future. Those who rely on such solutions are addressing a growing need. The reconstruction of Ukraine alone will require millions of tons of concrete. Given these prospects, it is not surprising that the share price has more than doubled since the beginning of May and is currently trading at CAD 0.99.

Vonovia – Tailwind for residential construction

The German federal government is allocating a substantial amount of funding for residential construction in 2025, with EUR 3.5 billion dedicated to social housing alone. This opens up clear opportunities for Vonovia as the largest private housing provider. The Company plans to invest around EUR 1.2 billion, primarily in new construction and energy-efficient modernization. The regulatory simplifications planned in parallel are crucial: accelerated approval procedures, digital processes, and a new, cost-saving building type "E" could significantly shorten project timelines. These framework conditions and possible government subsidies will facilitate Vonovia's plan to build around 3,000 apartments this year.

After three challenging years, Vonovia is showing significant progress in 2025. In the first quarter, adjusted EBITDA rose by 15% to just under EUR 700 million, while operating cash flow increased by over 43%. The low vacancy rate of 2.1% underscores the stable tenant base. This improvement lays the foundation for the upcoming management handover. Luka Mucic, previously CFO at Vodafone, will succeed CEO Rolf Buch at the end of the year. Strategic continuity will be maintained, while Mucic will contribute digital expertise from his time at SAP.

Under the label "Vonovia 2.0," the Company is pursuing an ambitious expansion of its business model. In addition to traditional leasing, value-added services are set to make a significantly greater contribution in the future. These include modernization packages for owners and digital service platforms. The Company is aiming for EBITDA of EUR 3.2 to 3.5 billion by 2028, which would represent an increase of around 30% compared with 2024. Analysts have mixed views on these plans. While Berenberg and Warburg see potential up to EUR 41, Jefferies remains cautious at EUR 28. The share is currently trading at EUR 28.53.

Germany's unprecedented EUR 500 billion investment offensive is creating clear winners. Rheinmetall is being boosted by billions in defense spending and is securing major international orders as a system-relevant supplier. Argo Graphene Solutions is hitting the spirit of the times with graphene-based building materials and positioning itself for the growing market for reinforced, climate-friendly materials. Vonovia is using the tailwind from massive government housing subsidies and regulatory simplifications to push ahead with its new construction offensive and its transformation to "Vonovia 2.0." These three companies are strategically in the fast lane of the government-fueled boom.