LVMH (Moet Hennessy Louis Vuitton) (LVMUY)

Paris based luxury goods company. If not the largest, it is one of the largest globally. Two businesses drive this stock. The drinks business, basically champagne in Cognac, as well as the fashion and leather goods business such as handbags, shirts, etc. Those 2 divisions are 75% of earnings before interest and tax. Cognac is a popular gift item in China and a lot of their government officials are being strongly discouraged from giving gifts. Has underperformed so there is probably some catch-up over the next year or 2.

Great story. You have to remember that a fair chunk of the value is Louis Vuitton, not the other parts of the business. These stocks have underperformed lately because of the emerging markets. Thinks that over 50% of their business comes from emerging markets. Relative to its peers, it is in a much better situation as it has a broader brand base. Had a very large expansion plan over the last several years, expanding in the emerging markets area and CapX is slowing down and that should help them. Trading at about 14X earnings so not excessively expensive. Has the potential to go much higher.

The global leader in the luxury brands industry. They are in fashions, leather goods, spirits, jewellery, etc. They do retailing in all the duty-free stores in the big airports. Relatively recession resistant. Well-positioned to meet emerging and developed markets demand. Dividend yield of 2.74%.

Luxury sector is relatively recession resistant. Quickly picks up as things improve. They are in many segments and well represented geographically. It is also a play on emerging markets. Trades in Milan and on the Pink Sheets in New York