11 Best Global Luxury Stocks to Buy
In this article, we will take a look at the 11 best global luxury stocks to buy now. If you want to skip our discussion on the luxury goods industry, go to the 5 Best Global Luxury Stocks to Buy.
According to JPMorgan, even though the US consumer is reducing expenditure on non-essential items, the demand for luxury goods remains robust. The research by the New York-based diversified financial services firm revealed that the luxury goods industry grew by 7% year-over-year (YoY) during Q4 2022, underscoring the industry's ability to withstand challenges. Consumers have been showing an inclination toward luxury goods by drawing upon their accumulated savings from the COVID-19 pandemic period. JPMorgan’s findings suggest that excess savings in the US peaked at around $2.1 trillion in Q2 2021 and fell to around $800 billion by Q2 2022. These savings are projected to be entirely depleted by the third quarter of 2023.
Chinese consumers, similar to their American counterparts, accumulated substantial savings due to the pandemic. JPMorgan estimates that the average savings rate in China rose from 29.9% in 2019 to 33.5% in 2022. The first two months of 2023 witnessed a notable rise in retail sales in China, registering a 17% YoY increase and attaining a four-year peak. Notably, industries such as gold and jewelry, cosmetics, and apparel were the primary drivers behind this retail boom. The Head of European Luxury and Sporting Goods at JPMorgan, Chiara Battistini, believes that if the pent-up demand for luxury goods is addressed completely, it could result in a YoY sales growth of 35% to 40% in the Chinese market. The expanding industry has led to a rising interest amongst investors in luxury brand stocks and luxury stocks ETFs like the Amundi S&P Global Luxury (GLUX.DE), which tracks the performance of the S&P Global Luxury Index. You can also read about the Top 10 Luxury Clothing Stocks to Buy here.
Quoting findings from the Altagamma Luxury Study conducted by Bain and Company, Matteo Lunelli, the President and CEO of prominent sparkling wine producer Ferrari Trento, highlighted that the global luxury goods industry achieved sales of $1.53 trillion (€1.4 trillion) in 2022. Despite the global economic uncertainty, there is a widespread belief that there will be an increase in sales and market size of the luxury goods industry in the coming years. The study predicts a significant rise in the total number of luxury goods consumers, forecasting an increase from 400 million consumers presently to 500 million by the end of this decade. India is set to emerge as one of the fastest-growing luxury goods markets in the world, as its industry size is expected to grow 3.5 times by the end of this decade due to the evolving preferences of younger demographics. Some of the best luxury brands to invest in according to hedge funds include PVH Corp. (NYSE:PVH), Tesla, Inc. (NASDAQ:TSLA), and Capri Holdings Limited (NYSE:CPRI).
Photo by Christian Wiediger on Unsplash
Our Methodology
We used Insider Monkey’s database of 910 elite hedge funds to shortlist the 11 best global luxury stocks to buy as of Q2 2023. The list also includes European luxury stocks. The stocks have been ranked in ascending order of the level of hedge fund ownership.
11 Best Global Luxury Stocks to Buy
11. L'Oréal S.A. (OTC:LRLCY)
Number of Hedge Fund Holders: 2
Dollar Value of Hedge Fund Holdings: $1,100,734
L'Oréal S.A. (OTC:LRLCY) is a Clichy, France-based cosmetics and beauty company with a portfolio of 23 luxury brands like Lanc?me, Giorgio Armani Beauty, Lanc?me, Yves Saint Laurent (YSL) Beauty, and Urban Decay in its portfolio.
L'Oréal S.A. (OTC:LRLCY) has the distinction of being the biggest cosmetics company in the world and caters to the needs of the luxury segment through the L’Oréal Luxe Division. The division has a presence in skincare, makeup, and fragrance categories. During Q1 2023, the division recorded a 7.7% YoY growth in sales to $4.09 billion (€3.73 billion). In April 2023, the division moved forward with the biggest takeover in its history by acquiring Australian luxury personal care brand Aesop for $2.5 billion.
10. Compagnie Financière Richemont SA (OTC:CFRUY)
Number of Hedge Fund Holders: 2
Dollar Value of Hedge Fund Holdings: $1,321,471
Compagnie Financière Richemont SA (OTC:CFRUY) is a Bellevue, Switzerland-based luxury goods holding company founded in 1988. The company is primarily focused on the luxury jewelry and watchmaking industry and owns a portfolio of popular brands like Cartier, Montblanc, Van Cleef, Arpels, and Jaeger-LeCoultre.
Compagnie Financière Richemont SA (OTC:CFRUY) reported record annual sales of $21.91 billion (€20 billion) during the most recent financial year, which reflected a 14% YoY growth on constant exchange rates. Meanwhile, operating profit increased by one-third to $5.48 billion (€5 billion).
9. LVMH Mo?t Hennessy - Louis Vuitton, Société Européenne (OTC:LVMUY)
Number of Hedge Fund Holders: 3
Dollar Value of Hedge Fund Holdings: $1,889,977
LVMH Mo?t Hennessy - Louis Vuitton, Société Européenne (OTC:LVMUY) is a Paris, France-based multinational luxury goods conglomerate. The company has the distinction of being one of the biggest luxury corporations globally, with a broad portfolio of brands across various sectors.
Some of the leading luxury brands owned by LVMH are Louis Vuitton, Christian Dior, TAG Heuer, Hublot, and Sephora. LVMH Mo?t Hennessy - Louis Vuitton, Société Européenne (OTC:LVMUY) also acquired the US luxury jewelry brand Tiffany around two years ago for a sum of $16 billion.
Fisher Asset Management was the leading hedge fund investor in LVMH Mo?t Hennessy - Louis Vuitton, Société Européenne (OTC:LVMUY) during Q2 2023.
8. Ralph Lauren Corporation (NYSE:RL)
Number of Hedge Fund Holders: 25
Dollar Value of Hedge Fund Holdings: $323,263,320
Ralph Lauren Corporation (NYSE:RL) is a New York-based luxury fashion and lifestyle brand founded in 1967. The company has a diverse presence across numerous categories, such as clothing, accessories, fragrances, and home furnishings.
Bank of America highlighted Ralph Lauren Corporation (NYSE:RL) as one of the top 10 value stocks in July 2023. John Kernan at TD Cowen also increased the price target on Ralph Lauren Corporation (NYSE:RL) stock from $141 to $150 and reiterated an Outperform rating on the stock on June 21. During Q4 FY23, Ralph Lauren Corporation (NYSE:RL) observed a 30% rise in sales in China.
7. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 27
Dollar Value of Hedge Fund Holdings: $468,156,280
Stellantis N.V. (NYSE:STLA) is a Hoofddorp, Netherlands-based automobile conglomerate that came into being following the merger of Italian-American automaker Fiat Chrysler Automobiles (FCA) and the French PSA Group.
Some of the luxury automobile brands in Stellantis N.V.’s portfolio (NYSE:STLA) include Alfa Romeo and Maserati. The company is evaluating the possibility of spinning off the Italian luxury automotive brand Maserati, which was founded in 1914. However, before taking such an action, Stellantis N.V. (NYSE:STLA) intends the brand to reach an operating margin of 15% in the next 12 months as opposed to 8.7% in 2022. This is part of a larger plan to achieve a long-term operating margin of 20% by the end of the decade.
Miller Value Partners shared its outlook on Stellantis N.V. (NYSE:STLA) in its Q3 2022 investor letter. Here’s what the firm said:
“We initiated a starter position in Stellantis N.V. (NYSE:STLA), which makes Jeep, Dodge and Fiat cars. The company has a nearly 8% dividend yield with enough net cash (cash minus debt) on the balance sheet to cover the dividend for almost five years. The company trades at 1.7x operating profits, which means the market is already expecting a likely drop in cash flow. Still, the shares appear to be worth meaningfully more than where they trade, and management is heavily aligned with stockholders with a 14% stake. They share our view that the valuation is compelling, as the company plans on repurchasing ~3% of shares outstanding this year.”
6. Ferrari N.V. (NYSE:RACE)
Number of Hedge Fund Holders: 30
Dollar Value of Hedge Fund Holdings: $848,926,430
Ferrari N.V. (NYSE:RACE) is a Maranello, Italy-based luxury sports car maker that was established in 1939 by Enzo Ferrari. The brand has created an image for developing high-performance and exclusive sports cars that reflect luxury, craftsmanship, and cutting-edge technology.
On July 7, Adam Jonas at Morgan Stanley increased the price target on Ferrari N.V. (NYSE:RACE) from $310 to $340 and reiterated an Overweight rating on the stock. Ferrari N.V. (NYSE:RACE) also replaced Tesla, Inc. (NASDAQ:TSLA) as the top pick at Morgan Stanley in March 2023 as it was termed resistant to the impact of a possible recession.
Here's what Ensemble Capital Management said about Ferrari N.V. (NYSE:RACE) in its Q1 2023 investor letter:
“Ferrari N.V. (NYSE:RACE) (+26.48%): The luxury automaker’s long awaited Purosangue, their first four door, four seater vehicle, has proven so popular that the company announced that they have ceased accepting new orders as they are sold out through all of this year and into 2024. The Purosangue is designed not as copycat sports utility vehicle that many other luxury automakers sell, but as a true Ferrari car that their devoted fan base can use for more practical transportation needs. Since the average Ferrari is only driven a few thousand miles a year or less, they are best understood as mechanical works of art rather than a means of transportation. But with the introduction of the Purosangue, Ferrari enthusiasts will have a vehicle that meets transportation needs, while still delivering the extremely high end experience that you would expect from a car that costs about $500,000.”
In addition to Ferrari N.V. (NYSE:RACE), some of the best global luxury stocks to buy include PVH Corp. (NYSE:PVH), Tesla, Inc. (NASDAQ:TSLA), and Capri Holdings Limited (NYSE:CPRI).
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Disclosure: None. 11 Best Global Luxury Stocks to Buy is originally published on Insider Monkey.