Many foreign markets are struggling economically, with China’s real estate issues weighing on the country’s economy and much of Europe still in a recession. Moreover, high U.S. interest rates are hurting countries that don’t have our strong labor market and resilient economic growth to offset that negative catalyst. Still, many wealthy foreign consumers are likely doing fine, as some of them own or manage companies that export products to the U.S. and a high percentage of them likely benefited from the relatively strong performance of U.S. tech stocks this year. As a result, the three global stocks that I selected for this column all cater to upper middle class and/or rich consumers. Additionally, two of the three firms that I selected obtain a large amount of their revenue from the U.S. Here are the three high-quality global stocks to buy on weakness.
BMW (BMWYY)
Of course, BMW (OTCMKTS:BMWYY) caters to high-end consumers and derives a large portion of its revenue from the U.S. Additionally, the automaker is likely to benefit to some extent from the United Auto Workers’ strike in America, as some consumers who would have purchased high-end vehicles from one of the automakers affected by the strike may not be able to do so and could select a BMW vehicle instead.
Further, BMW’s new electric vehicle, the i5, has received very good reviews. InsideEVs praised the i5 for its fast acceleration, “smooth and comfortable” highway driving and “superb” overall ride.
he i5 also offers hands-free driving on some highways.
Moreover, Seeking Alpha columnist Welbeck Ash Research notes that BMW’s growth and profit margins are outperforming those of many of its peers, as its revenue increased 7% in the first half of 2023 versus the same period in 2022 and its EBIT margin came in at 10.6% for the first six months of 2023.
BMW has a very low forward price-earnings ratio of 5.8. Its combination of strong financial results, a very well-respected brand, good products and a low valuation make it one of the best global stocks to buy.
Louis Vuitton (LVMUY)
French luxury product maker Louis Vuitton (OTCMKTS:LVMUY) certainly specializes in catering to wealthy consumers, while it obtained 37% of its sales from the U.S. in 2022. In June, Forbes ranked the handbag maker as the fourth most popular luxury brand on the planet. Moreover, the publication noted that Louis Vuitton attracted more traffic to its website than any other name on the list, while the number of consumers visiting its website had surged 25% in 12 months.
Turning to the company’s financial results, its top line jumped to $23 billion in the second quarter, up from $19,24 billion during the same period a year earlier, while it reported operating income of $6.3 billion, up significantly from $5.36 billion during the same period a year earlier.
Also encouraging is that billionaire Bernard Arnault acquired $230 million of Louis Vuitton’s shares last month.
The stock has a reasonable forward price-earnings ratio of 20.
Luckin Coffee (LKNCY)
Luckin’s (OTCMKTS:LKNCY) coffee costs “about $1.40 to $2.75” per cup, according to CNBC. Although that may not sound like a luxury item, it’s important to keep in mind that China’s average urban income was just $15,946 last year. So Luckin certainly caters to the country’s upper middle class and wealthy.
According to CNBC, Luckin has been very successful in China due to its rapid, “aggressive” store expansion, as it has opened over 10,800 stores since it was founded in 2017.
But Luckin still has a great deal of room for growth, as research company GlobalData predicts that China’s coffee revenue will expand at a compound annual growth rate of 8.7% between 2022 and 2027. Moreover, I believe that, as I noted in a previous column, Luckin will gain a great deal of publicity and many new customers with the alcohol-infused coffee drink that it recently launched.
Last quarter, Luckin’s top line soared 88% year-over-year to $855 million, while it generated earnings per share of 48 cents, making it ideal to wrap up this list of global stocks to buy.
On the date of publication, Larry Ramer’s wife held a long position in LKNCY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
