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Investors May Find Gains In European Luxury

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Investors May Find Gains In European Luxury

Safe bets are few and far between in today's market environment, but that doesn't mean that traders aren't still looking for some sound investments in sectors set to accelerate throughout the next year. One such sector is European luxury goods according to Goldman Sachs.

The investment bank noted this week that it sees a 20 percent upside in the luxury sector over the next year, giving investors the opportunity to make some money within the industry.

Where To Buy

Goldman advised that investors be selective when buying into the sector, as the industry still faces some strong headwinds. The firm upgraded LVMH Moet Hennessy Louis Vuitton SE(ADR) (OTC: LVMUY) from Neutral to Buy and also pointed to Burberry Group plc (BURBERRY GROUP UNSP ADR EACH REP 2 ORD (OTC: BURBY)) and MONCLER SPA NPV (OTC: MONRF) as buying options.

Related Link: Ferrari Glides Into Citi's Coverage, Albeit At Neutral

At the moment, all European luxury brands are trading lower, as the sector took a massive hit in 2015 due to global economic factors, making now a good time to buy shares while they're cheap.

What About China?

As the Chinese typically buy one in three luxury goods sold around the world, developments within the nation's economy are expected to have a major impact on the sector as a whole.

While the nation's market issues have weighed on sentiment, most analysts agree that the Chinese public still has a strong desire to buy branded luxury goods. As China's economy shifts to one more focused on consumers, it will be important to keep luxury goods affordable and available to the middle class.

Risks

While most agree that China will continue to propel luxury goods sales, some question whether 2016 could be a bumpy year. Not only is the nation's economy still in a precarious position, but tourism has started to wane as well. Most Chinese consumers buy luxury goods abroad, but visits to places like Paris where most designers have opened up shops have dropped following terrorist attacks.

Image Credit: Public Domain

Latest Ratings for BURBY

DateFirmActionFromTo
Jun 2019Goldman SachsUpgradesSellNeutral
Apr 2019Bank of AmericaDowngradesNeutralUnderperform
Mar 2019Goldman SachsDowngradesNeutralSell

View More Analyst Ratings for BURBY
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