Luxottica Group SpA (ADR) (LUX), Tiffany & Co. (TIF): Three Luxury Brands With Adamant Businesses

After the recent weakness in LVMH’s shares (the company is down by almost 6% year-to-date), I see irresistible long-term value in the shares. With some parts of its brand portfolio working extremely well, such as DFS, Sephora, Bulgari, Dior perfumes and Hennessy, I think LVMH is an unavoidable long for anyone looking to get some exposure to the luxury market.

All the above taken into account, the fortunes of Moet Hennessy Louis Vuitton ultimately depend on Louis Vuitton’s top-line growth in Asia. Since the brand is not opening additional stores in order to protect long term brand exclusivity, any improvement essentially depends on local demand picking up in China. While narrowing price gaps versus Europe may help Asia, its very tough to predict short term demand growth in China.

Growing year-over-year sales by 7%, trading at 2013 18x P/E and paying a 2.5% cash dividend yield, LVMH is my favorite pick in the luxury market.

Bottom line

I believe all the three companies named above own great brands and have a huge future coming from top line growth in emerging markets. While LVMH is a multi-brand luxury conglomerate that sells everything from bags to wine, Tiffany & Co. (NYSE:TIF) is a concentrated bet on jewelry. Luxottica Group SpA (ADR) (NYSE:LUX) is also a multi-brand company, but purely focused on the high-growth-high margin eye wear business. I would personally go long on all of them.

While Luxottica (with a market capitalization of $24 billion) and Tiffany (with a market capitalization of $9.9 billion) could be M&A targets going forward, LVMH (with a market capitalization of $88 billion) is a great and much more stable asset to own just to enjoy its growing cash dividends.

The article Three Luxury Brands With Adamant Businesses originally appeared on Fool.com.

Federico Zaldua has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Federico is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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