Shane Obata LVMH (Moet Hennessy Louis Vuitton) LVMUY-OTC PAST TOP PICK Sep 06, 2024

Great until middle of last year, when things turned against it. Lots of concerns about economic rebound in China, geopolitical tensions. More beta, as it's consumer discretionary. Leader in the space. Long-term secular growth, as we'll see continued growth of wealth in developing countries, demand for these products, and urbanization. 13% earnings growth.

Chart shows how stock's come off. Behemoth in luxury goods. Very well positioned. Reported results a week ago, most of the stock move was already baked in. Great track record of executing through slowdowns. Trades at only 20x earnings; cheaper than COST or WMT, but with higher growth over the long term because of positioning and superb margins. (Price target in euros.) Yield is 2.1%.

Thinks stock can be up 20% over next 12-18 months. 

Has a solid, long-term track record and has done well for him. Luxury goods weather recessions well; the rich get richer in recessions.

Enjoys big gross margins, but shares have fallen because consumers, notably China, have slowed down in a slow post-Covid recovery. But this is priced into the stock now. LVMH continues to grow their brands, the best in luxury. Tiffany will benefit them in the next little while. They continue to innovate.

She trimmed it a while ago. It's been terrible all year. There's no more pent-up demand. The aspirational buyers happened during the pandemic when consumers were flush. This will struggle for a little while.

Diversified, high-luxury company. Toll road for high luxury, and that runs through China (1/3 of its customer base). A clean, quality, Chinese consumer proxy. More to go if you think the China stimulus is real. (Price target in euros.) Yield is 1.9%.

If the Chinese stimulus is not that effective, he's less positive on it, as that's this stock's biggest driver. It is a higher-risk proxy, but his other Top Picks are low beta to compensate.

Luxury goods face a global recession, but LVMH shares are attractive. If they go lower, he will add shares.

Spectacular company. Luxury brands had already taken a hit because of China. He's holding off. If we do get a recession, this will get really cheap and we've seen that before. This name is quite cyclical, but best in class.

Their brand, Sephora, needs to lower prices in this economy, but they won't, and so will lose. Premiums are over in the U.S. and no longer work.