LVMH Stock Drops Despite Strong Sales Growth; Upside for Long-Term Investors
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LVMH stock has dropped 25% since May despite strong business performance, as market overestimates risks like recession.
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But LVMH proved resilient in past recessions with limited sales declines. Luxury brands like LVMH have wealthy customer base whose purchasing power is less affected.
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LVMH Q3 sales grew 9% driven by fashion, cosmetics, jewelry. Market expects unsustainably high short-term growth, but current growth is healthy.
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CEO Bernard Arnault's vision key to LVMH's success. He protects brand value over short-term growth. Family owns 50% and reinvests dividends into LVMH.
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Conservative valuation models show LVMH is undervalued. Stock is a buy with 10% margin of safety based on discounted cash flow model.