Here’s a European stock that stands to benefit from strong U.S. dollar

By:
on Sep 7, 2022
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  • Boris Schlossberg says the LVMH stock is good for a strong dollar.
  • He also likes the European stock as its products have durable demand.
  • Shares of LVMH are currently down about 15% from its YTD high.

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Strength of the U.S. dollar has been the front and centre of all financial debates in recent months. And there are stocks that stand to benefit from it, says Boris Schlossberg. He’s a Managing Director at BK Asset Management.

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Boris Schlossberg likes the LVMH stock

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A name that particularly pops out to him is LVMH Moet Hennessy Louis Vuitton SE (EPA: MC) that’s currently down about 15% versus its year-to-date high. Explaining why on CNBC’s “Power Lunch”, Schlossberg said:

It has tremendous amount of sourcing in Euros, designs in Euros, but sells also in the U.S., which is a very strong market. Because a lot of its sourcing is in Euros, its labour costs will be much cheaper.

His view is in line with Wall Street that also recommends you buy this stock as it has upside to €790 a share on average.

In July, LVMH said its revenue in the fiscal second quarter was up 27% on a year-over-year basis.

LVMH products have durable demand

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Schlossberg likes the European stock also because the demand for its products remains strong regardless of the macroeconomic backdrop.

The demand for this product cycle is very robust. It’s really almost recession-proof simply because the upper end of the market is not feeling the inflationary pressures or any kind of income declines.

He expects sales to take off further as China comes back online after the COVID lockdowns.

Lastly, at a forward price-to-earnings multiple of 20, the analyst dubs it attractive from the valuation perspective as well. LVMH also has a dividend yield of 1.87%.

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