The easing of Covid-19 restrictions, the availability of vaccines and the money consumers accumulated during the lockdowns have fueled an extraordinary 12-month growth in Europe in a number of sectors.
The highs and lows in 2021 saw earnings rebound strongly, helping European consumer discretionary stocks rise 31.4% from December 2020 to December 7, outperforming the broader S&P Europe 350 index, which climbed 16.3%, according to the independent research firm CFRA.
“European consumer stocks have rebounded dramatically and returned to pre-Covid levels,” said Andrew Tam, CFRA analyst. The year of “reopening the trade” was boosted by profits, fiscal stimulus, pent-up consumer demand and holiday budgets that were shifted towards consumer goods, he adds.
Luxury goods were a remarkable sector – stocks have on average risen 42% since the start of the year through Dec. 7, according to Tam.
Larger, more diverse luxury groups outperformed with earnings above their peers and share price growth, he adds. Cartier owner
Richemont Financial Company
(ticker: CFR.Switzerland) is up 66%. French fashion house
(RMS.France) increased by 75%.
Barron recently wrote that gains are expected to continue at the world’s largest luxury group,
LVMH Moët Hennessy Louis Vuitton
(MC.France), up 37%. Two actions featured in the column this year also excelled. Barron Featured Italian luxury retailer
(MONC Italy) in March, when shares hit 49.55 euros ($ 55.90) thanks to strong online sales and better-than-expected growth in China.
Sales in this key market, as well as South Korea and the United States, were behind a 55% jump in third-quarter sales, Moncler said in October. The title has since gained 26%, to € 62.46.
Barron wrote in July that eyewear maker Ray-Ban and Oakley
(EL.France) was in a strong position to transform its activity on the promise of cost reduction, new products and possible acquisitions. In September, one of these products was launched: a pair of Ray-Ban (in partnership with
[FB]) supplied with built-in cameras and microphones. The share, which was at € 152.23, jumped 19.4% to € 181.80.
Food, beverage and tobacco manufacturers lost their lockdown momentum as consumers walked away, but this was tempered by customers drinking in bars and restaurants, resulting in higher margins.
British American Tobacco
(BTI) was at £ 25.36 in October when this column highlighted it in October for its investments in new products. It is now up 9%, to £ 27.65.
Not all of our recommendations hit the mark. In February, the British online fashion and cosmetics giant
(ASC.UK) was seen as a big winner in lockdowns against rivals with brick and mortar stores. Its stock stood at 57.78 pounds sterling ($ 76.33) and ASOS seemed on the right track for its international expansion.
But buyers then returned to physical stores, and growing supply chain problems led ASOS to issue a profit warning in October. The stock has since fallen 60% to £ 22.99.
Automakers, facing supply chain issues that have led to chip shortages, have tried to cash in on them by directing scarce resources to high-end, high-margin vehicles. For its part, the German automobile giant
(DAI.Germany) took advantage of the slowdown to accelerate its restructuring plan and give more impetus to electric vehicles, Barron written in May. This was not enough to make the title climb, which fell 5.6% to € 69.27.