It’s no secret that the stock market has been volatile over recent years, impacted by events such as the global pandemic and political tension. While some asset classes have dipped in value and increased risk, luxury watches yield impressive ROI. Overall, the watch market has proven itself as a strong investment decision.
So, is now the time to invest in watches? If yes, which brands should you back?
Let’s explore a few of the top watch brands on the stock market and their valuation. While all of the below shows a downward valuation trend from November 2021, they also share a gradual upward movement recently — let’s dive in.
Fossil Group, Inc. (NASDAQ: FOSL)
Fossil is a household name for watches, but they also sell other fashion items, including jewellery and handbags. Fossil watches make up most of the company’s revenue as a global brand.
Trading on NASDAQ as FOSL, stocks have fallen -54.80% over the past 12 months but are showing a slight upward trend in recent weeks. In the process, FOSL has earned $0.53 per share over the past 12 months. While not a massive ROI, it’s better than a loss considering the drop in stock prices.
As far as valuation goes, the last two quarters of 2021 showed a marked improvement but considering Fossil Group’s tumultuous history, caution should be exercised. Now, shares are available at an affordable rate and could offer a decent ROI (if you can endure the volatility).
Movado Group (NYSE: MOV)
As an American luxury watchmaker known best for its Museum Watch, Movado went public in 1993 on NYSE as MOV. Established as a veteran watch brand, Movado has a firm grip on the market — regardless of volatility.
Experts suggest that Movado Group may be undervalued and stocks are worth watching. At the start of 2022, Movado Group saw a double-digit share price rise. Earnings also grew by 110.3% over the past year. Even so, the brand is trading at a lower price when compared to the rest of the luxury industry.
As Movado is trading below the industry P/E ratio, it could be a good time to enter the stock. However, it’s important to consider a few red flags, such as an unstable dividend track record.
Ralph Lauren Corporation (NYSE: RL)
Founded by fashion icon Ralph Lauren, the NYC-based company produces a range of luxury products — including watches. Founded in 1967, Ralph Lauren Corporation joined NYSE as RL in 1997.
With a recent market cap of USD 6.56 bn, RL has mimicked the volatility of other luxury brands. As a result, the rating has moved from “hold” to “buy” and even a “sell” recommendation. Experts have given RL an average rating of “moderate buy” with considerations.
Valuation metrics show that Ralph Lauren has the potential to outperform the market and could show an inline return from the RL shares that are relative to the market in the coming months.
The Swatch Group AG (SIX: UHR.SW)
The Swatch Group operates through the Watches & Jewellery segment (as well as the Electronic Systems segment) and has followed a similar trend as other watch brands. Recovering from a sharp dip in value, UHR has a neutral technical rating, with several analysts leaning toward a buy recommendation.
Stocks appear to be trading around their fair value, and earnings are forecast to grow 8.04% per year. While the future growth of UHR is looking positive, the financial strength of the company needs to be monitored.
Garmin Ltd. (NASDAQ: GRMN)
Renowned for delivering innovative GPS technology across various markets, including watches, Garmin Ltd. trades on NASDAQ as GRMN.
The future of GRMN is looking positive, with a growth forecast estimated at 9.03% per year. This figure is slightly lower than the average earnings growth of 13.5% over the past five years.
Even with the positive forecast, various experts recommend holding stock — for now. All five segments of the business are growing (not only watches), and there’s a new share-repurchase plan in the pipeline, demonstrating management’s confidence in the future.
Compagnie Financière Richemont SA (SIX: CFR.SW)
Commonly known as Richemont, the Switzerland-based luxury goods company produces and sells various products, including watches.
Currently, experts place the stock in the middle of a wide and falling short-term trend, with further falls expected in the future. In the past couple of months, CFR has seen a double-digit share price rise of 10% while the current purchase price is considered a bargain by many.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only