The Five Favorite Stocks Of… Caroline Reyl (Pictet Asset Management)

How is the stock market traded in the summer? directione Stock market watchers poll weekly about their favorite securities.

This week it’s Caroline Reyl, Premium Brands fund manager at Pictet Asset Management.

1 / Ferrari

Ferrari remains a solid investment. FY 2023 numbers tick all the boxes faster than expected. The company is managed conservatively, and can rely on record demand and very strong pricing power. The order book is full through 2025 and the margins are high and continue to rise. In addition, new models will be launched this year, including the Purosangue. Not only will this contribute to sales, but it will also contribute to margins thanks to their positive pricing.

2 / Intercontinental Hotels Group

InterContinental Hotels Group (IHG)’s 2023 numbers are very good and show no sign of slowing compared to the trend of recent months. Revenue per room remains higher than in 2019 and we expect a further increase in occupancy. The current valuation of the hotel industry is below historical levels. IHG is confident about the prospects for 2023, driven in particular by continued strong demand for leisure and business leisure, while price negotiations are progressing well in this sector.

3/ Richemont

Richemont is a model of Swiss quality with relatively high entry prices and attractive margins, along with a particularly good balance sheet with ample liquidity. The company achieves attractive margins on a range of world-famous brands such as Cartier, Van Cleef & Arpels, Jaeger-LeCoultre or the original Belgian Delvaux. In addition, the luxury group is fully benefiting from a rebound in sales from Asia and more specifically China, where customers are still eager to spend after two years of forced austerity due to the Covid crisis.

4/ LFM

A luxury icon, with products ranging from lipsticks to haute couture. LVMH owns a portfolio of brands across hotels, luggage, jewellery, liquors, apparel and many more, creating a complete customer experience and allowing for many synergies. With significant exposure to China, LVMH is reaping the rewards of retaliatory spending since the country’s reopening. The brand is also expanding into the US and Europe and broadening its target audience to include male consumers. Margins for Generation Z are sustainably high post-pandemic: Louis Vuitton saw sales increase by 25%.

5 / Loreal

One of the biggest names in the cosmetics industry. With about 30% of its sales in China, the company is benefiting from the country’s reopening, which should also ease supply problems over the past year. L’Oréal is capitalizing on the popularity of its products as people go out more and social lives resume. International tourism is recovering and the European holiday season has begun. This warrants additional optimism because a large portion of the profits from cosmetics sales is generated through traveler purchases, with margins twice as high as other sales channels.

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