With inflation finally cooling and the fears of a looming recession coming to an end, the rich are back with their bucks. As the rich get richer, several luxury goods companies will make the most of it. While luxury goods aren’t easily accessible to all of us, they are the first choice for the wealthy. One good thing about luxury companies is they have a small but specific customer base who are loyal to their brand — making these businesses grow. Now is the right time to start looking for luxury stocks to buy. They are resilient and can handle a downturn in the economy.
A massive drop in consumer spending could hurt, but the stocks are performing better with an improvement in the economy. One thing to understand is that the rich aren’t as impacted by the economic slowdown as others, and those with the money will continue to spend. If you are someone who doesn’t want to invest in luxury goods but aspire to own a luxury, go straight to the luxury stocks. You will see big returns over the coming months as consumer spending improves. With that in mind, let’s look at the best ones.
Luxury Stocks to Buy: Ferrari (RACE)
Ferrari (NYSE:RACE) is a well-known name in the luxury auto industry. If you are to own only one luxury stock, it should be the luxury supercar maker. Luckily, the stock isn’t as expensive as its cars. RACE stock is trading at $315 and is up 46% year to date. The stock is very close to the 52-week high of $329 but could soar higher. What sets Ferrari apart from other carmakers is its core customers. They are highly loyal to the brand and so affluent they do not suffer heavily from rising interest rates or inflation.
The company commits to producing only a few vehicles each year, which means it doesn’t face supply chain issues as many other automakers do. Ferrari is also not in the race for reporting higher delivery numbers each quarter. Since it is one of the top luxury automakers in the world, the company also has the pricing power to increase the value of its cars, seeing a higher gross margin.
For the second quarter, the company saw a 33% jump in profit from the previous year, and after the strong results, it raised the guidance for the full year. It now expects revenue of around 5.8 billion euros, stating it has a strong order book across the world. It also has a backlog of orders for at least the next year. Yes, the stock isn’t cheap either, but sometimes you get what you pay for. The investment offers consistent growth and resilience in case of an economic downturn. It also has the potential to enjoy higher margins and see an increase in annual shipments in the coming years. RACE is one of the best luxury stocks to add to your portfolio today.
Estée Lauder (EL)
A personal favorite, Estee Lauder (NYSE:EL) is better recognized for the iconic brands it owns and the way it is expanding across the globe year after year. The company has a solid history. It is one luxury stock that will continue growing no matter what happens in the economy. The company sets itself apart with a wide product range and something for every budget. That is a good way for any business to survive in a competitive market. Estee Lauder is not a company that solely relies on the super-rich segment and can keep going despite inflation.
EL stock is trading at $167 today and is down 34% year to date. This dip is a great opportunity to add the stock to your portfolio. That said, the stock is trading much lower than the 52-week high of $284 and has the potential to move in the upward direction now that the economy is improving. In the recent quarterly results, the company saw sales of $3.75 billion, down 12%, and net earnings of $156 million. It also pays a dividend and has a yield of 1.57%
However, I believe this is a temporary drop in the business, and it will pick up very soon. The company operates many product segments besides skincare, showing a well-diversified portfolio. The current dip is nothing big to worry about since it could be affected by external headwinds. Once retail picks up, EL stock will start moving in the upward direction. Estee Lauder has a long history and solid financials, proving the company can bounce back. That makes it one of the luxury retail stocks to own right now.
LVMH Moet Hennessy Louis Vuitton (LVMUY)
An undisputed leader in the world of luxury goods, LVMH Moet Hennessy Louis Vuitton (OTCMKTS:LVMUY) will never disappoint. Known for producing some of the most iconic pieces and most expensive products, this brand has the finest clientele, and the customers are never worried about the price. That means the company is safe from the effects of inflation or recession. LVMUY hit $500 billion in market value in April, and its future is highly secure. It is present globally and has a well-diversified portfolio of brands.
Louis Vuitton has made a name for itself, and many aspire to own one of its products. As the well-off continue to spend, the company keeps opening more locations across the globe. A star performer for many years, LVMUY reported a 17% growth in fashion and leather goods revenue during the first half of 2023 compared to the previous year and a 26% growth in selective retailing. Despite the economic turmoil, the company remains confident of its numbers and has a solid revenue expectation for 2023.
With an umbrella of iconic brands and a history of catering to the who’s who of the industry, Louis Vuitton is here to stay. If the company’s goods are out of your current price range, bet your money on the stock and take home solid gains in the long run. This is one of the luxury growth stocks that will continue to grow no matter what happens to the world, and it could be an ideal addition to your retirement portfolio.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
