Luxury: Citigroup's Top 6 Stocks That Will Benefit From a Rise in Luxury Spending
Interested in the trends of luxury brands? Citigroup has helpfully put together a list of luxury stocks from around the world that are expected to rise higher.
According to Business Insider's Eric Platt, "the strategy holds that luxury good and discount product companies will continue to post strong returns, while firms in the middle will face increasing pressure."
"We believe this is due to relatively lower levels of unemployment for consumers with a college degree (4% vs. total unemployment of 9.1%) and higher consumer confidence (54.2 vs. national average of 45.4)," Deborah Weinswig, the lead Citi analyst, wrote in the report.
Do you think that wisdom will reflect in the profits of luxury companies? If so, you may be interested in Citi's top luxury picks. Here are the names trading on the U.S. stock market. (Click here to access free, interactive tools to analyze these ideas.)
List compiled by Eben Esterhuizen, CFA:
1. Brown-Forman (NAS: BF.B) : Market cap of $10.63B. Brown-Forman engages in manufacturing, bottling, importing, exporting, and marketing alcoholic beverages. Target price at $85 vs. current price at $74.63. Implies a potential upside of 13.89%. The stock has gained 21.36% over the last year.
2. Apple (NAS: AAPL) : Market cap of $369.36B. Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Target price at $500 vs. current price at $401.36. Implies a potential upside of 24.58%. Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 12.28. The stock has gained 27.05% over the last year.
3. Estee Lauder (NYS: EL) : Market cap of $19.56B. Engages in the manufacture, marketing, and sale of skin care, makeup, fragrance, and hair care products worldwide. Target price at $112 vs. current price at $119.77. Implies a potential upside of -6.49%. Exhibiting strong upside momentum -- currently trading 22.52% above its SMA20, 23.74% above its SMA50, and 23.28% above its SMA200. The stock has had a good month, gaining 15.39%.
4. Starwood Hotels & Resorts Worldwide (NYS: HOT) : Market cap of $9.94B. Operates as a hotel and leisure company worldwide. Target price at $60 vs. current price at $51.32. Implies a potential upside of 16.91%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.07). The stock has had a good month, gaining 31.16%.
5. Starbucks (NAS: SBUX) : Market cap of $30.72B. Operates approximately 16,858 stores, including 8,833 company-operated stores and 8,025 licensed stores. Target price at $48 vs. current price at $41.29. Implies a potential upside of 16.25%. The stock has had a good month, gaining 10.55%.
6. Saks (NYS: SKS) : Market cap of $1.75B. Operates fashion retail stores in the United States. Target price at $13 vs. current price at $10.69. Implies a potential upside of 21.61%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.5). The stock is a short squeeze candidate, with a short float at 32.21% (equivalent to 9.26 days of average volume). The stock has had a good month, gaining 23.45%.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above.
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