1. Kering SA (OTC:PPRUY)
Analyst Upside Potential as of September 12, 2024: 1,281.60%
No. of Hedge Funds as of Q2 2024: N/A
Kering SA (OTC:PPRUY) is a France-based company that specializes in luxury products and manages several globally popular Houses in Fashion, Jewelry, and Leather Goods. These Houses include Gucci, Saint Laurent, Balenciaga, Bottega Veneta, Alexander McQueen, Brioni, DoDo, Pomellato, and Ginori 1735, along with Kering Beaute and Kering Eyewear. The Group primarily sells its products through retail stores and is actively working across the globe.
Kering SA holds a significant market presence and reputation for its high-end products. The company underwent a 5.37% compounded annual growth in its revenue over the last three years. It is currently trading at a forward P/E of 15.66, at a 5.91% premium to its sector. Kering SA (OTC:PPRUY) holds a significant competitive advantage due to its brands’ set reputation in the luxury apparel landscape. Its brand names of Gucci, Saint Laurent, and Balenciaga have become global household names. However, the company is experiencing a dip in its earnings due to the overall fall of the luxury market. Overall group revenue for the first half of 2024 came up to €9.0 billion, with sales from the directly operated retail network falling 12% in the first quarter. The primary reason behind these trends is the deceleration in the Asia-Pacific market. Despite this dip, the Group holds significant potential to make a comeback. Free cash flow from the company’s operations remained steadily high at €1.9 billion in the first half of 2024, significantly because of effective inventory management. This excludes real estate acquisitions, including acquiring a renowned property on New York City’s Fifth Avenue. The Group’s free cash flow from operations amounted to €1.1 billion, shedding a positive light on its profitability.
Gucci alone operates around 536 stores as of June 30, 2024. During the first half of 2024, the brand prioritized organic growth by maximizing the productivity of its existing network of stores, closing two in the process. It also undertook efforts to identify opportunities in global distribution, targeting high-growth sales channels and regions. These efforts are set to continue in the second half of 2024, boosting the company’s sales and further establishing it as a leader in the industry. The stock has an analyst upside potential of 1,281% as of September 12, 2024.
Overall, PPRUY ranks first among the top 11 luxury clothing stocks to invest in now. While we acknowledge the potential of luxury clothing companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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