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Summary

Sven analyzes LVMH following a significant price decline of 53% from its highs, noting that the P/E ratio has reached multi-decade lows. Sven explains that the core business, encompassing brands like Louis Vuitton, Dior, and Tiffany, remains fundamentally strong with high margins and minimal debt. However, Sven emphasizes that the valuation is highly sensitive to growth; if growth returns, the P/E could hit 30, but without it, the P/E may stagnate between 10 and 15.

Sven highlights that the luxury market is facing headwinds due to rising interest rates and reduced consumer spending power. Sven notes that while the stock is fairly priced for a 9% return under modest growth assumptions, the downside risk in a true economic crisis is substantial. Sven concludes that from his perspective, the risk-to-reward ratio is currently unfavorable, categorizing the stock as a high-risk, low-return play compared to other options.

LVMH (MC.PA): Sven notes that with current earnings per share of €22, a 5% growth rate and a P/E of 20 would place the intrinsic value near the current stock price. Sven suggests that if growth returns to 10% over the next four years, the stock could double to roughly €800. However, Sven warns that in a major crisis, the stock could easily lose half its value, and he currently views other investments as superior.

Mentioned Stocks

MC.PA

Sentiment: SELL

Reasoning: Sven views LVMH as a 'high risk low return' investment in the current economic climate. Sven mentions that while the stock is fairly priced for an 8-9% return if it grows at 5%, the upside is limited compared to the risk of the stock halving in a crisis. Sven notes that a return to 10% growth could see the price double to €800, but currently prefers other stocks, stating that for him personally, 'other is better'.

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