Despite increased volatility in broader markets, consumer spending, including appetite for luxury goods, continues to grow. For example, the S&P 500 Index of Apparel Accessories and Luxury Goods Sub-Industries is up more than 10% so far in 2021. As a result, investors are now wondering how luxury goods stocks might perform in 2022.
Regular readers of InvestorPlace.com may know that demand for premium products is the primary growth driver for most luxury goods stocks. For example, the European luxury sector fell 15% from August to October after China “announced wealth redistribution plans,” ending an impressive rally in luxury goods stocks.
Second, European luxury goods stocks were hit even harder by news of China’s factory inflation spike in October, implying squeezed margins and fueling uncertainty over the growth outlook for China. the second largest economy in the world. As a result, Goldman Sachs (NYSE:SG) lowered its forecast for global luxury industry sales growth in 2022.
During this time, Morgan stanley (NYSE:MRS) estimates that digital demand will add $ 50 billion in revenue to the luxury goods space by 2030. “The metaverse will likely take many years to develop; however, NFTs and social games (eg, online games and concerts that people avatars attend) present two short-term opportunities for luxury brands, ”the company said.
So with that in mind, here are three luxury goods stocks that might be worth adding to portfolios over the long term.
Now, let’s dive in and take a closer look at each one.
Luxury Goods Inventories: Capri (CPRI)
Source: Tada Images / Shutterstock.com
52 week range: $ 37.95 – $ 69.26
UK-based Capri is the parent company of several brands including Michael Kors, Versace and Jimmy Choo. It is therefore a leading player in the field of high-end accessories and clothing.
Capri released results for the second quarter of fiscal 2022 beginning of November. Revenue increased 17% year-over-year (YOY) to $ 1.3 billion. In addition, adjusted net income was $ 235 million, or $ 1.53 per diluted share. This is an increase from $ 137 million, or 90 cents per diluted share, during the same period last year.
Regarding the results, CEO John D. Idol said, “We are pleased with our second quarter results with revenues, gross margin, operating margin and earnings per share exceeding all of our expectations.
Management’s strategic initiatives have helped offset headwinds generated by supply chain constraints and rising logistics expenses. While Michael Kors, Versace and Jimmy Choo all saw double-digit revenue growth. Overall, Versace stood out with sales up 45% year-over-year.
Additionally, the company expects to generate $ 5.4 billion in revenue in fiscal year 22. Capri also raised its guidance for its diluted EPS outlook to an estimate of $ 5.30.
Additionally, CPRI stock jumped nearly 20% after the company reported third-quarter earnings. Now, shares are currently trading in the $ 67 territory, up over 60% year-to-date (YTD). Despite the increase in its price, the CPRI stock is trading at just 11.3 times futures earnings and 1.9 times trailing sales. In addition, the 12-month median target for the CPRI stock is just $ 80 per share.
Source: Alex Erofeenkov / Shutterstock.com
52 week range: $ 31.20 – $ 52.06
Dividend yield: 1.56%
Harley-Davidson, based in Milwaukee, Wisconsin, is a legendary company well known for its motorcycles, as well as parts, accessories, riding gear and clothing.
Harley-Davidson released its Q3 results end of October. Revenue increased 17% year-on-year to $ 1.37 billion, beating analysts’ expectations of $ 1.14 billion. Net income climbed 36% to $ 163 million, or $ 1.05 per diluted share under GAAP. This is an increase from $ 120 million, or 78 cents per diluted share under GAAP, during the prior year period. Cash and cash equivalents ended the quarter at $ 2.06 billion.
Commenting on these measures, CEO Jochen Zeitz said, “Harley-Davidson had a strong third quarter and we have seen many of our Hardwire strategic initiatives perform well, providing encouraging initial evidence of our five-year strategy. “
Harley-Davidson has launched a strategy five-year plan revitalize its brand by focusing its resources on the most profitable bikes. As a result, US shipments jumped 10% despite supply chain constraints, offsetting lower overseas sales. In addition, Wall Street was satisfied to have outperformed the performance of the quarter of the previous year.
Now, HOG stock is hovering around $ 37, up about 1.5% this year. The stocks are trading at 8.8 times futures earnings and 1.1 times sliding sales. In addition, the 12-month median target for HOG stock is at $ 48 per share.
Stocks of luxury goods: LVMH Moët Hennessy Louis Vuitton (LVMUY)
Source: Postmodern Studio / Shutterstock.com
52 week range: $ 118.48 – $ 168.06
Dividend yield: 1.01%
LVMH, based in Paris, France, is a global producer and distributor of luxury goods, including leather goods, wines and spirits, perfumes and cosmetics, jewelry and watches, among other luxury companies.
LVMH announced loudly Q3 results in mid-October. The company has seen its revenues recover quickly from the lows of the novel coronavirus pandemic. In fact, LVMH recorded a 46% increase in revenue in the first three quarters, with total revenue up 11% from 2019 levels. In addition, revenue from Third-quarter business grew 20% year-over-year to $ 15.5 billion.
In addition, management is diversifying operations so that brands can appeal to a wider range of consumers. At the start of the year, LVMH strengthened the jewelry business by acquiring the leading jewelry brand Tiffany. In October, the company also added the French company of perfumes and cosmetics Officine Universelle Buly in his wallet.
LVMH stock currently trades in the $ 160 territory, up 28.7% so far in 2021. The shares are trading at 29 times forward earnings and 6.5 times future earnings. leak sales.
At the date of publication, Tezcan Gecgil had (directly or indirectly) no position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publication guidelines.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the US and UK. In addition to having completed graduate studies in the field, she has also passed all three levels of the Chartered Market Technician (CMT) exam. His passion is options trading based on the technical analysis of fundamentally sound companies. She especially enjoys setting up weekly covered calls to generate income.
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