Hermes - Luxury goods about to make a comeback? Countercyclical buying opportunities

Company description

Hermes is a 180-year-old family-owned luxury goods company best known for its Birkin and Kelly bags. Its main businesses are leather goods, which account for about half of its sales, clothing and accessories (21% of sales), silk and textiles (10%) and other products such as perfumes, watches, jewelry and home furnishings.

Fundamental data

The luxury goods industry is the most profitable in the world. This is of course due to the strong margins that the corporations, and Hermes in particular, deliver. On the other hand, those who can afford these goods are less likely to cut costs than the rest of humanity. Since Corona, Hermes has been able to significantly increase sales and margins and is now around a third higher than its competitors such as Kering or LVMH. This is a strong, fundamental sign.

Chart technical outlook

I also like the stock very much from a technical perspective. After the strong breakout to a new record high at the beginning of February, Hermes' share price is consolidating within a trend channel and recently reached the former breakout and support area of around EUR 2,050. The first bullish advances are likely to start above EUR 2,085. Although it still cannot be ruled out that the luxury goods group's securities will dip to EUR 1,980 before the buying wave could start, it is becoming increasingly unlikely.

Over the next few weeks, Hermes shares could rise significantly in price. They are currently trading in the anti-cyclical buy range, while a pro-cyclical buy signal only arises when the price exceeds EUR 2,250. I see a very likely chance that the share price could reach EUR 2,640. I would like to position myself in this regard. The company will publish quarterly figures on July 25. The estimates for the year indicate a 10% increase in profits.

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