Let's Revisit Kamala Harris' Tone-Deaf Memorial Day Tweet
Why Ron DeSantis Says the Debt Deal Is ‘Totally Inadequate’
Rolling Stone Picked the Weirdest Fight to Have With Ron DeSantis
Why the White House Correspondents' Association Ripped Into Joe Biden This Weekend
Retired And Former FBI Agents Let Your Voices Be Heard
Tucker Carlson, The Truth, and The Spiritual Battle
No Will, No Way
America's Version of Bizarro World
'What Is She Doing Here?': Report on Feinstein's Health Details Senator's Confusion Over...
Will Randi Weingarten Ever Learn?
People Are Not Buying LA Dodgers' 'Christian Faith' Event After Team to Honor...
Panicked Much? Joe Biden Rebuffs Peter Doocy When Asked About DeSantis Potentially Pardoni...
Indiana AG Todd Rokita Sees a Win in Abortionist Fined for Violating Privacy...
Pramila Jayapal's Warnings About Debt Ceiling Speaks Further to Democrats in Disarray
'Odds Are That the Only Person Who Could Beat Sherrod Brown' Is Someone...
OPINION

Wall Street Luxury for the Common Investor

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

With the recent publicity about the “Occupy Movement” and their highlighting the income disparity between the 99% and the 1%, I thought investors might be interested in learning a companies doing very well selling to the 1%. 

The company is LVMH Moet Hennessy Louis Vuitton.  Although based in Paris their shares trade on the pink sheets in the US under the symbol LVMUY.PK.  They are the world’s largest luxury goods company and have 60 world class brands.  Their business segments and leading brands are:

Segment

Brands

Wine & spirits

 Hennessy, Moet & Chandon, Dom Perignon

Leather goods and accessories

 Louis Vuitton, Fendi, Hermes

Watches & Jewelry

 TAG Heuer, Bulgari, De Beers

Specialty Retailing

 duty free products to cruise lines, Le Bon Marche


Le Bon Marche was founded in 1848 and is the oldest department store in the world. As a historical reference Napoleon’s nephew was Emperor of France when this store opened in Paris.  These are top drawer brands with global name recognition.  This is very good and LVMH is clearly a great company, but should you buy the stock?

They reported sales of 23 billion euro’s and net income of 5.3 billion for 2011.  Their gross profit margin is 65%, a phenomenal rate and compares to Merck’s 64%.  Their net income grew 22% last year and the net margin was 22% which is extremely high.  They generated free cash flow of 3 billion euro’s.  The importance of this is their business in not capital intensive so the cash flow can be used to pay down debt, make acquisitions (they acquired 125 year old jeweler Bulgari last year) and increase dividends.  Revenue grew 16% last year but the shares are selling at a P/E of 15.

They see the emerging growth countries in Asia as especially strong opportunities.  Macau, Vietnam and China offer a great potential since local consumer income is growing quickly and the company has relatively low exposure. 

The 2008 market crash punished the stock but it has come back strong over the last three years.  The all time high share price was $40 in 2008 and is now trading about $33.  

Join the conversation as a VIP Member

Recommended

Trending on Townhall Video