With the luxury goods sector steadily aiming to reclaim its pre-pandemic glory, the trajectory in 2023 has been marked by a resilient rebound. Amid the rebound, the appeal of luxury goods stocks persists, captivating investors in pursuit of blending luxury and financial prosperity.
Moving into 2024, select premium brands will likely take center stage as standout investments, offering a seamless fusion of elegance and economic promise. In this context, Finbold has identified three luxury goods stocks that can become compelling investments for the year ahead.
Ferrari (NYSE: RACE)
Investing in Ferrari’s (NYSE: RACE) stock in 2024 promises to align with a company strategically positioned for growth in the dynamic automotive landscape. The stock is particularly noteworthy considering Ferrari’s proven ability to adapt, grounded in a foundation of prioritizing exclusivity and ultra-luxury.
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For instance, the adaptability is grounded by the fact that Ferrari has set its sights on the electric vehicle (EV) space, anticipating the rollout of its first EV in 2025 and hoping to take on dominant players such as Tesla (NASDAQ: TSLA). Notably, the Italian automaker’s EV’s progress is reportedly ahead of schedule, making this development a pivotal moment in its history.
Despite the inherent risks in transitioning to EVs, Ferrari’s leadership has assured investors that this bold move into the future will not compromise the company’s acclaimed profitability.
Beyond forward-looking initiatives, Ferrari’s financial appeal extends into the realm of capital-intensive and margin-narrow industries. The combination of pricing power, brand recognition, and exclusivity propels Ferrari into a league of its own, with profit margins reaching heights untouched by mainstream and luxury automakers.
In the third quarter of 2023, Ferrari posted earnings up 23.5% to €1.5 billion and net profits up 46% to €332 million. This distinctive position has the potential to impact the stock positively.
Looking ahead to 2024, analyzing RACE stock reveals insights from 16 Wall Street analysts. As of December 30, data from TipRanks points to an average price target of $374.86, with a high forecast of $456 and a low forecast of $304.67. This average represents a 10.76% change from the last recorded price of $338.43. Eight analysts recommend buying the stock, while the remainder suggest holding.
Overall, RACE has showcased strong performance in 2023, surging nearly 60% on a year-to-date basis.
Ralph Lauren Corporation (NYSE: RL)
Investing in Ralph Lauren (NYSE: RL) is backed by the brand’s distinctive business dynamics and robust financial foundation. Unlike many fashion retailers vulnerable to the whims of trend-chasing consumers, Ralph Lauren sets itself apart by emphasizing timeless basics, exemplified by its iconic polo shirts. This strategic focus shields the company from challenges that force competitors into aggressive discounting to clear outdated inventory, allowing Ralph Lauren to wait until the next selling season without compromising profit margins.
Beyond its traditional strengths, Ralph Lauren showcases a forward-thinking stance by strategically expanding its digital and omni-channel capabilities. Investments in mobile technology, omni-channel services, and fulfillment have positioned the company’s digital business as a significant growth driver.
Ralph Lauren’s proactive embrace of digital expansion, including launching new digital sites in key markets like Australia, underscores its commitment to adapting to evolving consumer behaviors.
Meanwhile, according to TipRanks, Wall Street has assigned the stock a ‘moderate buy’ status. Based on the analysis of 11 analysts providing 12-month price targets for Ralph Lauren in the last three months, the average price target is $138.64. The high forecast is $166, and the low forecast is $100. This average represents a 3.86% change from the last recorded price of $144.20.
Overall, Ralph Lauren has demonstrated positive performance throughout 2023, with the stock gaining over 30% year-to-date, marking a noteworthy trajectory in the market.
LVMH Moët Hennessy Hennessy Louis Vuitton (OTCPK: LVMHF)
LVMH Moët Hennessy Louis Vuitton (OTCPK: LVMHF) touts a well-diversified portfolio comprising 60 different brands spanning diverse sectors, including wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, and selective retailing.
Over the past five years, the company’s growth trajectory culminated in a remarkable achievement – a record revenue of €79.2 billion ($87.56 billion) and a profit of €21.1 billion in 2022. This accomplishment underscores LVMH’s resilience, even in the face of challenges such as the 2020 slowdown caused by the pandemic. Notably, in the first half of 2023, LVMH recorded revenue of €42.2 billion, marking a significant 15% increase.
LVMH’s outlook receives an additional boost from the reopening of China, a crucial market for luxury goods. Despite sales not fully recovering to pre-pandemic levels, the company anticipates growth throughout 2023, emphasizing its optimistic stance.
Additionally, the company’s adept ability to navigate challenges and its robust market position and strategic vision make LVMH an attractive investment for those seeking exposure to the luxury goods sector.
In tandem, Wall Street analysts at TipRanks have accorded LVMH a ‘moderate buy’ rating for the next 12 months. Drawing insights from 15 Wall Street analysts providing 12-month price targets for LVMH in the last three months, the average price target is €814.07 ($900). The high forecast is €950, and the low estimate is €710. This average represents a 10.52% change from the last recorded price.
At the moment, the stock has gains of over 5% on a YTD basis.
Overall, while the highlighted stocks exhibit strong fundamentals, their trajectory in the new year will also depend on other factors, such as the general economic outlook.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
