Kering (PPRUY)

(A Top Pick Apr 06/22, Up 1%)

China closing up caused a drop in sales but it is re-opening and the Chinese people are huge buyers of luxury goods. It has big growth ahead and lots of free cash flow. It is also very good at turning brands around.

Spectacular job of turning around tired brands, such as Yves St Laurent. No net debt. Expects double-digit revenue growth. Shares are down because of China locking down, plus unrest in Europe, creating a great opportunity to step in. (Price target in Euros.) Yield is 2.15%. (Analysts’ price target is $77.61)

(A Top Pick Jan 30/20, Down 2%) A major brand under them is Gucci. They were surprisingly not hurt last year due to switching to online efficiently. Revenues also held up well since people spent their travel budget into luxury goods. Their strength is picking up tired brands and then rejuvenating them. Great cashflow with a bullet proof balance sheet. They will make more acquisitions of brands that are cheap and invest in them. A cheap grower.

The Asian middle class is driving all of this and those numbers are still mushrooming. GUCCI is the fastest growing of all the major brands and is 60% of KER-EPA. It is trading at a much cheaper multiple than other companies with better growth going forward. He expects 35% earnings growth over the next two years.