Investing in Luxury Goods Stocks: Billionaire Ken Fisher's Recommendations and Top Analyst-Favored Companies

Unlock the lucrative potential in luxury goods stocks with billionaire Ken Fisher's advice. Discover top analyst-favored companies for profitable investments.

Jun 20, 2023 - 11:17
Jun 20, 2023 - 11:18
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Investing in Luxury Goods Stocks: Billionaire Ken Fisher's Recommendations and Top Analyst-Favored Companies
Billionaire Ken Fisher's Recommendations and Top Analyst-Favored Companies

Renowned billionaire investor Ken Fisher, with a successful track record on Wall Street and personal wealth valued at approximately $6.5 billion, has recently shared his valuable investment insights. Fisher believes that luxury goods stocks present a lucrative opportunity for savvy investors. Luxury goods companies possess a unique ability to thrive even in challenging economic times, as they attract a dedicated customer base that values exclusivity and exceptional quality. In line with Fisher's recommendation, we have conducted an in-depth analysis to identify two luxury goods companies that Wall Street analysts highly regard and expect to deliver substantial growth in the coming months. Let's explore the enticing investment potential of these companies.

Luxury Goods Stock #1: Tapestry, Inc. (TPR)

Tapestry, Inc., a globally renowned luxury brand, has solidified its position as a leader in the fashion and accessories industry. The company operates three distinct labels: Coach, Kate Spade New York, and Stuart Weitzman. Each brand caters to different segments of the luxury consumer base, offering a diverse range of elegant and fashionable products.

Despite a slowdown in luxury purchases in the United States, Tapestry reported strong financial results for the fiscal third quarter of 2023 (March quarter). The company achieved a remarkable 5% year-over-year increase in revenue, reaching $1.51 billion, surpassing analysts' expectations by $70 million. Furthermore, Tapestry raised its revenue growth outlook for the fiscal year and anticipates a profit of $3.85 to $3.90 per share, exceeding the previous estimates. Additionally, Tapestry plans to repurchase around $700 million in common stock during the current fiscal year, demonstrating its commitment to enhancing shareholder value.

Guggenheim analyst Robert Drbul acknowledges Tapestry's position as an "Industry Baby" due to its high profitability, experienced management team, robust balance sheet, and strong brand equity of the Coach brand. Drbul expects Tapestry's management to execute their strategy effectively, which could lead to significant multiple expansion and drive substantial upside potential for the stock. Drbul rates Tapestry shares as a Buy, with a price target of $60, representing a 38% increase from the current levels.

The majority of analysts share Drbul's positive outlook, as reflected in the Strong Buy consensus rating among 10 Buy ratings and 3 Holds. The average target price of $51.27 implies a potential one-year gain of approximately 18%. Moreover, investors can benefit from Tapestry's dividend, with a current quarterly payout of $0.30 and a yield of 2.65%.

Luxury Goods Stock #2: Capri Holdings (CPRI)

Capri Holdings is a leading global fashion luxury group that boasts three iconic brands under its umbrella: Michael Kors, Versace, and Jimmy Choo. With a strong presence in the luxury fashion industry, Capri Holdings is renowned for its craftsmanship, glamour, and innovation. Each brand within the portfolio offers a wide range of products, including apparel, accessories, footwear, and fragrances.

Although Capri Holdings experienced a decline in revenues across its brands in the fiscal fourth quarter of 2023 (March quarter), the figures were in line with expectations. Total revenue decreased by 10.1% to $1.34 billion, but still exceeded the Street's estimates by $60 million. Adjusted earnings per share of $0.97 met analysts' forecasts.

Looking ahead, Capri Holdings projects full-year fiscal 2024 revenue of approximately $5.7 billion, slightly below the consensus estimate of $5.73 billion. However, the estimated earnings per share of $6.40 surpass the Street's forecast of $6.28.

BMO analyst Simeon Siegel believes that Capri Holdings' stock is undervalued and offers an attractive investment opportunity at its current levels. Following discussions with the company's management, Siegel expressed confidence in Capri Holdings' guidance and its ability to maintain brand equity. He reiterated an Outperform rating on the stock and set a price target of $68, implying an impressive 84% growth potential over the next year.

The Moderate Buy consensus rating among analysts further supports the positive sentiment towards Capri Holdings, with 9 Buy ratings and 6 Holds. The average target price of $50.69 suggests a one-year return of approximately 37%.

Conclusion:

Ken Fisher's recommendation to invest in luxury goods stocks aligns with the optimistic outlook surrounding Tapestry, Inc., and Capri Holdings. Both companies possess strong brand portfolios, experienced management teams, and solid financial positions. Tapestry's consistent revenue growth and increased outlook, along with Capri Holdings' undervalued stock and positive earnings projections, make them attractive investment choices. Wall Street analysts are optimistic about the future prospects of these companies, expecting significant share price appreciation in the coming months. As investors seek opportunities in the luxury goods sector, Tapestry and Capri Holdings emerge as promising choices to capitalize on this growing market.

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