Betting on the green economy: Five interesting German small caps from Freedom24

German small-cap stocks offer an opportunity to participate in the transformation of the German economy particularly in terms of mobility and green energy. German GDP is projected to grow roughly 1.1-1.5% in 2026, a gradual recovery from the near-stagnation of 2024-2025. Fiscal support is channeled through funds for decarbonization, green mobility, and infrastructure, supporting demand for rail transport, renewable energy, and low-emission equipment.

Dominik Mayr, head of Freedom24 in the DACH region, has identified five small-cap stocks that he views as attractive investment opportunities against this backdrop. Some of these names delivered substantial gains in 2025.

Sixt SE 

Sixt (SIX2) has steadily transformed itself from a traditional car rental operator into a comprehensive mobility platform, offering subscriptions, ride-booking services, and digital rentals across Europe and North America. While the sector remains economically sensitive, demand for flexible mobility solutions from businesses and travelers has remained resilient.

Germany recorded a record year for tourism in 2025, providing a strong tailwind for Sixt’s core rental business. Margin expansion has been driven by digitalization, more efficient fleet management, disciplined cost control, and a growing share of premium electric vehicles. In the first nine months of 2025, Sixt increased revenue by nearly 8% year over year to EUR2.98 billion, while pretax profit rose 23.5% to EUR348.2 million.

According to MarketWatch data, the consensus rating from nine analysts on Sixt shares is “buy.” On Tuesday, January 13, Jefferies reiterated its “buy” recommendation at a EUR100 per share target price, implying upside of about 45% from the close on Thursday, January 15.

Thyssenkrupp Nucera AG & Co. KGaA

thyssenkrupp nucera (NCH2), spun off from its parent thyssenkrupp, is one of the few globally recognized suppliers of alkaline water electrolysis systems used in green hydrogen production.

The company benefits directly from Germany’s industrial base and EU-backed hydrogen programs. It is a clear beneficiary of the shift to new industrial technologies. This profile makes the stock particularly attractive to ESG-focused investors in the German market.

thyssenkrupp nucera has a sizeable project portfolio and relatively predictable order flow from government-supported decarbonization programs, with large industrial customers among its clients. Execution risks remain, but long-term fundamentals appear stable. In its fiscal 2024/2025 (ended December 2025), the company reported EBIT of EUR2 million, compared with a EUR14 million loss a year earlier. Revenue totaled EUR845 million, down 2% year over year, while free cash flow improved to EUR11 million from negative EUR78 million in the prior year.

According to MarketScreener data, seven analysts rate the stock “buy,” three “hold,” and one “sell.” The average target price of EUR10.26 per share implies upside of roughly 14.2% from current levels.

Vossloh AG 

Vossloh (VOS) is a key supplier of rail fastening systems, switches, and services for public transportation networks. Rail infrastructure remains a core pillar of Germany’s climate policy. A strong engineering base and extensive export exposure, particularly to Asia and the Middle East, help the company to mitigate fluctuations in domestic financing. Stable recurring revenue from service contracts and rising demand linked to climate-focused transport programs continue to support performance.

In the third quarter of 2025, Vossloh increased revenue 9.1% year over year to EUR325.9 million. EBIT rose 13.4% to EUR 31.3 million, lifting the EBIT margin to 9.6%, up from 9.2% a year earlier.

The stock gained roughly 80% in 2025. MarketScreener data shows three “buy” versus three “hold” ratings. The average target price of EUR 94.70 per share implies upside of about 13.8%. On January 9, Kepler Capital reiterated its “hold” rating with a target price of EUR85 per share.

Wacker Neuson SE

Wacker Neuson (WAC) develops compact construction and agricultural machinery, with a growing focus on battery-powered and low-emission models. The company benefits from a profitable position, a broad dealer network, and technological leadership in emission-free equipment. Its customers include mid-sized contractors and European municipalities. Further growth depends largely on the pace of public infrastructure spending and the electrification of municipal fleets.

Shares climbed around 60% in 2025, supported by improved free cash flow and a reaffirmed full-year guidance. In the third quarter of 2025, revenue rose 6.3% year over year to EUR550.3 million, while EBIT surged 67% year over year to EUR41.3 million, lifting the EBIT margin to 7.5% from 4.8% a year earlier.

The stock currently has limited analyst coverage. MarketScreener lists two “hold” ratings and one “sell,” with an average target price of EUR21 per share, implying upside of about 11.7%.

SMA Solar Technology AG 

SMA Solar (S92) is one of Europe’s leading manufacturers of inverters and energy management systems used to integrate renewable generation into electricity grids. The company has a diversified project portfolio spanning residential, commercial, and industrial segments, and continues to demonstrate solid operational performance.

As solar capacity expands in Germany and key export markets such as the U.S. and India, SMA remains one of the few European players combining scale with advanced technological expertise rooted in Germany’s renewable energy ecosystem. In the first nine months of 2025, group sales increased 7.1% year over year to EUR1.13 billion. EBITDA before special items increased to EUR118.6 million, nearly double the level recorded in the same period of 2024.

SMA Solar shares rose more than 130% in 2025, leaving expectations for 2026 elevated. According to MarketScreener data, the stock carries five “hold” ratings, with an average target price of EUR26.20 per share, implying downside of about 19.5%. On Thursday, Berenberg bank reiterated its “hold” rating with a EUR36 target price, while on Monday Jefferies downgraded the stock from “buy” to “hold,” citing concerns that the market may be underestimating pressure on margins from elevated investment needs.