Insights: Bullish Int'l Consumer Stocks
• The Swiss watch industry is in a world of hurt. According to a Dec. 19 Bloomberg article, Swiss watch exports are on track to reach the lowest level since 1984. And for the past three years, technicals have reflected that trend. This is beginning to change.• Compagnie Financiere Richemont (CFR-CH), the pure-play luxury name, and Swatch Group (UHR-CH) are breaking out from 12-month bottom patterns, simultaneously reversing multi-year declines. Yet headlines have yet to confirm this turnaround, setting up an attractive contrarian theme.
• This reminds us of Macau casino stocks last summer. In July, when we highlighted the bottom patterns visible in names like Galaxy Entertainment (27-HK), headlines highlighted 25 months consecutive months of declining revenue. Ultimately, technicals reversed higher before the industry's revenue finally ticked upward. Perhaps the same will be true for Swiss watch exports?
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Compagnie Financiere Richemont is engaged in the luxury goods market. Co.'s interests encompass some names such as Cartier, Van Cleef & Arpels, Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC, Alfred Dunhill, Montblanc and Net-a-Porter. Co.'s luxury goods businesses are separated into four segments: Jewellery Maisons (design, manufacture and distribution of jewellery products), Specialist Watchmakers (design, manufacture and distribution of precision timepieces), Montblanc Maison (design, manufacture and distribution of writing instruments) and Other Businesses (Alfred Dunhill, Lancel, ChloA(c), Net-a-Porter, Purdey, textile brands and other manufacturing entities).
Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.
Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.
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