Luxury is on the rise: analysts advised on four promising stocks in the sector

The luxury goods market is showing early signs of reviving demand in China - a key market that accounts for up to a third of global sales of premium brands - as well as thanks to robust consumer spending in the U.S., analysts at JPMorgan and Bank of America told CNBC. They advised investors on four promising stocks in the sector.

Luxury companies' third-quarter reports look "encouraging" and the sector itself is showing signs of improvement, Chiara Battistini, head of European luxury and sporting goods at JPMorgan, told CNBC.

In particular, JPMorgan noted the stabilization of the Chinese market and the emergence of "green shoots" of demand, although it is too early to talk about a complete reversal of trends and a "real turning point" in this market, said Battistini. On the other hand, strong U.S. consumer spending in the third quarter was a "big positive surprise" and "actually the main outcome" of the period, the analyst said. The key drivers of wealth growth - stock market performance, cryptocurrencies and precious metals - remain resilient, she said. "All of these provide meaningful support for the U.S. consumer," she added.

The luxury sector is still a challenging one - also due to ongoing duty negotiations and high dependence on Asian demand, warned Bruno Verstrate, founder of investment company Nautilus Wealth Management. However, he is rather positive about the market's prospects: "When the situation [with duties] normalizes, luxury will again be in a good position to continue to grow, as the number of affluent people in the world continues to increase significantly, and Asia obviously plays a role in this," he emphasized.

Which four stocks do analysts think could give investors a chance to capitalize on these two trends?

Battistini said JPMorgan has named shares of Swiss jewelry and watchmaking holding Richemont as its "top pick" for three consecutive years.

According to the bank, Cartier and Van Cleef & Arpels brands, which are owned by Richemont, managed to profitably take advantage of the rise in prices for precious metals and still demonstrate the best dynamics in the jewelry segment.

Richemont shares were down 1% at the moment on November 17, although they added almost 6% on Friday, November 14, after the publication of the statements. Richemont's sales for the six months ended at the end of September rose 5% to 10.6 billion euros, exceeding analysts' expectations, CNBC wrote.

In addition, Battistini advised investors to take a closer look at shares of Italian fashion house Salvatorre Ferragamo. In the third quarter, it increased quarterly revenue for the first time since 2022, and its shares are now worth 10.7%, more expensive than they were at the beginning of 2025. Meanwhile, back in August, they were trading at their lowest price in five years. The company is signaling an increasingly strong recovery - albeit after a period of very weak results offering a low base for comparison, CNBC notes.

"Current market conditions and buyer behavior are not very favorable for companies trying to reverse a period of decline," Battistini noted. - But Ferragamo, especially in the last quarter, has shown a marked shift and is on a growth trajectory."

At trading on November 17, the company's securities were down more than 2%.

According to analysts at Bank of America, demand for the products of the French holding company LVMH in China accelerated sharply - from -13% in the second quarter to -3% in the third. Against this background, LVMH shares approached the maximum value for six months, writes CNBC.

LVMH in mid-October reported organic sales growth of 1% in the third quarter compared to the same period in 2024 - the first time after two consecutive quarters of declining sales.

At trading on November 17, the company's securities were getting cheaper by about 2%.

Matthew Boss, head of US retail sector research at JPMorgan, singled out US premium brand Ralph Lauren, noting that it has "great potential ahead". Ralph Lauren's share of the fragmented luxury market is just 2%, and its main growth opportunities lie in its womenswear, accessories and outerwear lines, Boss explained.

The company's shares were down 0.9% in trading on Nov. 17.

This article was AI-translated and verified by a human editor