Renowned billionaire investor Ken Fisher, with a successful career on Wall Street and personal wealth valued at approximately $6.5 billion, has recently shared his valuable investing insights. Fisher believes luxury goods stocks present a lucrative opportunity for savvy investors. Luxury goods companies possess a unique ability to thrive even in difficult 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 hold in high regard and expect to generate substantial growth in the coming months. Let’s explore the attractive investment potential of these companies.
Luxury Goods Stock #1: Tapestry, Inc. (TPR)
Tapestry, Inc., a world-renowned luxury brand, has solidified its position as a leader in the fashion and accessories industry. The company operates three distinct brands: Coach, Kate Spade New York and Stuart Weitzman. Each brand caters to different segments of the luxury consumer base, offering a wide range of stylish and fashionable products.
Despite a slowdown in luxury purchasing in the United States, Tapestry reported strong financial results for the fiscal third quarter of 2023 (March quarter). The company achieved a notable 5% year-over-year increase in revenue, reaching $1.51 billion, beating analyst expectations by $70 million. Additionally, Tapestry raised its revenue growth outlook for the fiscal year and expects earnings of between $3.85 and $3.90 per share, beating previous estimates. Additionally, Tapestry plans to repurchase approximately $700 million of common stock during the current fiscal year, demonstrating its commitment to enhancing shareholder value.
Guggenheim analyst Robert Drbul recognizes Tapestry’s position as an “industry baby” due to its high profitability, experienced management team, strong balance sheet and strong brand equity of the Coach brand. Drbul expects Tapestry management to execute its strategy effectively, which could lead to significant multiple expansion and drive substantial upside potential for the stock. Drbul rates Tapestry shares a Buy, with a price target of $60, representing a 38% upside from current levels.
Most analysts share Drbul’s positive outlook, as reflected by the Strong Buy consensus rating out of 10 Buy ratings and 3 Hold ratings. The average price target of $51.27 implies a one-year upside potential of approximately 18%. Additionally, 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 luxury fashion group with three iconic brands under its umbrella: Michael Kors, Versace and Jimmy Choo. With a strong presence in the luxury fashion industry, Capri Holdings is recognized for its craftsmanship, glamor and innovation. Each brand in the portfolio offers a wide range of products, including clothing, accessories, footwear and fragrances.
Although Capri Holdings saw a decline in revenue across all its brands in the fiscal fourth quarter of 2023 (March quarter), the numbers were in line with expectations. Total revenue declined 10.1% to $1.34 billion, but still beat Street 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, estimated earnings per share of $6.40 beat the Street forecast of $6.28.
BMO analyst Simeon Siegel believes Capri Holdings shares are undervalued and offer an attractive investment opportunity at their current levels. Following discussions with company management, Siegel expressed confidence in Capri Holdings’ direction and its ability to maintain the value of the brand. He reiterated an Outperform rating on the stock and set a price target of $68, implying an impressive 84% upside 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 price target 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 have strong brand portfolios, experienced management teams and strong financial positions. Tapestry’s steady revenue growth and improving prospects, coupled with Capri Holdings’ undervalued stock and positive earnings projections, make them attractive investment options. Wall Street analysts are optimistic about the future prospects of these companies and expect significant share price appreciation in the coming months. As investors look for opportunities in the luxury goods sector, Tapestry and Capri Holdings emerge as promising options to capitalize on this growing market.
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