Better Buy: LVMH vs. Richemont
Over the past year, many sectors collapsed as inflation, rising interest rates, and other macro headwinds drove investors from higher-growth stocks toward more recession-resistant plays. One safe haven has been the luxury goods sector, since affluent consumers are generally better insulated from economic downturns than their lower-income and middle-class counterparts.
LVMH (OTC: LVMUY) and Richemont (OTC: CFRH.F) are two of the bellwethers of that resilient industry. LVMH's European shares have declined just 3% this year, while Richemont's shares have pulled back by about 16%. Both stocks easily outpaced the bear market declines across the major indexes. Should investors buy either of these luxury stocks today?
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The key differences between LVMH and Richemont
Paris-based LVMH is the world's largest luxury company. It owns 75 brands across five categories -- wines & spirits, fashion & leather, perfumes & cosmetics, watches & jewelry, and selective retailing -- and its top brands include Louis Vuitton, Dior, Loewe, Fendi, Tiffany, Bulgari, and Sephora. LVMH generated 49% of its revenue from its fashion and leather goods segment in the first nine months of 2022. The rest was split between its selective retailing (18%), watches & jewelry (13%), perfumes & cosmetics (10%), and wines & spirits (9%) divisions.
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