Over the past decades, jewelry with even a small diamond was considered a real treasure, and its price corresponded to the premium status of the gem. However, the jewelry industry also has complaints about precious stones: the inability to customize the size, shape and other characteristics of a stone, its high price and often unethical mining methods. Companies solving these issues can dictate the conditions for the entire market, which is why investors are focusing on lab-grown diamond stocks. The gems created in a controlled environment shine no less brightly and can bankrupt classic mining companies due to a significant increase in supply.
Methods of synthesizing diamonds have existed since the middle of the last century, but traders avoided the products because such sales could destroy the fragile order of the diamond business. However, this cannot be ignored forever. The lab-grown diamond market has grown in the last decade. Forecasts point to a $59.2 billion capitalization by 2032, which could trigger the opposite process — the closure of most diamond mining companies.
Adamas One (JEWL)
Six years of operation is a relatively short period compared to companies with a production history of several centuries. Nevertheless, Adamas One (NASDAQ:JEWL) is an industry pioneer and the first lab-grown diamond company. The “Best Lab-Grown Diamond Manufacturer for 2023” has managed to unlock the potential of gemstones in terms of jewelry and technology. From creating a diamond seed to forming a monocrystal, the production process is controlled and scalable. This positively distinguishes Adamas One from classic mining methods. The company’s 36 patents guarantee optically, chemically and physically indistinguishable products from those mined in India, South Africa or anywhere else.
The first six months after the IPO in 2022 were a difficult test of strength but did not stop JEWL from taking the top position among lab-grown diamond stocks. The market capitalization of $17.4 million could become a launching platform for take-off. The industry’s planned CAGR of almost 9% for 2023-2028 prepares investors’ pockets for profits. In Q1 2024, Adamas One’s gross margin was 81.4% and could exceed 70% after the production expansion is completed.
Brilliant Earth (BRLT)
Brilliant Earth Group (NASDAQ:BRLT) sees the shift from old ways of mining diamonds as a step towards ethicality. Since 2005, the world leader in the supply of artificially grown diamonds has been setting the trend for transparency and sustainability in the jewelry industry. To popularize the brand, the company uses both an e-commerce platform and a network of showrooms, as a significant part of customers still prefer to see the product offline.
A month ago, BRLT was at $2.17 and has risen by $0.17 since then. Such changes may indicate an imminent change in the first half of the 2024 trend and a repeat of the November-December 2023 scenario when the share rose by more than $1. In the face of competitive pressure, the company remains enthusiastic. It reports Q1 2024 revenue of $97.34 million, which is only a million below the consensus forecast. Subsequent reports may add more optimism, as this representative of lab-grown diamond stocks with a beta of 1.59 is ready to take off at any time.
Lvmh Moet Henn ADR (LVMUY)
The fashion community has heard the name “Louis Vuitton” in the context of the luxury market but might be surprised to hear that Lvmh Moet Henn ADR (OTCMKTS:LVMUY) is now a sustainable diamond producer. The investment in Lusix has brought the fashion giant to the top of the lab-grown diamond stocks list. The use of solar energy in producing artificial gemstones replaces the standard solutions of Tiffany & Co., Bulgari and Chaumet, which focused on natural stones. The company is creating a balanced portfolio to capture different market segments.
The last five years have increased the price of LVMUY by 69.61% and its capitalization to $365 billion. Owning LVMH shares has made many rich, as over the past 15 years, the average annual return has been 18.1%. Despite the high volatility, the stock remains the No. 1 buy for those who appreciate assets with a quick payback. With a P/E ratio of 22.14, LVMUY offers a high dividend yield in the context of high profitability. The recent 24% decline in the share price from its all-time high screams of untapped opportunities for upside once the correction is complete.
On the date of publication, Julia Magas did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
