SIG - The 3 Best Diamond Stocks With the Potential to Dazzle Investors
2024-07-10 02:44:00 ET
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Civilizations rely on many resources to stay afloat. Some people use precious metals to demonstrate their wealth while some companies use them as the foundation for important products and services. Diamonds are luxurious items that you’ll find in many pieces of jewelry. Miners will excavate mines to find this precious resource, but diamonds aren’t only for making fashion statements.
You’ll find diamonds in many industries . The material is used in the medical field. Equipment like drills use diamonds for their tips to make them more durable. Diamonds are also critical for the automobile industry’s production process.
Diamond stocks allow investors to capitalize on the strong demand for this resource. This demand will continue to grow since diamonds are critical to many industries. The material isn’t some type of fad that will fade away within a few years.Civilizations have been using diamonds for thousands of years . These diamond stocks stand to benefit from the material’s continued popularity.
LVMH Moet Hennessy Louis Vuitton (LVMH)
LVMH (OTCMKTS: LVMUY ) is a top fashion brand that is associated with luxury. The company commands high prices for various products, such as jewelry and watches. The company recently came out with lab-grown diamonds that should help the company expand its market share. Fred Jewelry is using the lab-grown diamonds. It’s one of the subsidiaries under the LVMH umbrella, and it’s one of the reasons shares are up by 71% over the past five years.
The fashion giant trades at a 22.5 P/E ratio and offers a 2.92% yield. The corporation’s market cap is approaching $400 billion. LVMH reported 3% year-over-year revenue growth in the first quarter of 2024 . Selective Retailing and the Perfumes & Cosmetics segment were the two biggest winners, with 11% and 7% year-over-year revenue growth, respectively.
The fashion industry is projected to maintain a compounded annual growth rate of 8.94% through 2029 . A good outlook for the industry suggests that LVMH will reward long-term investors.
Rio Tinto (RIO)
Most diamonds aren’t grown in labs. Miners have to excavate various sites to discover diamonds and bring them to the surface. Rio Tinto (NYSE: RIO ) is one of those miners, and the U.K. miner has been in business since 1873.
Although shares have only been up by 11% over the past five years, the gains are more impressive than they appear. Rio Tinto logged those gains while giving investors a high yield which currently stands at 6.48%. Rio Tinto also has an 11 P/E ratio. The company doesn’t only mine diamonds. It also mines other materials like iron ore and copper. It’s a well-diversified miner that has plenty of enthusiasts.
Wall Street analysts are bullish on the stock and have rated it as a Strong Buy . The average price target suggests an 18% upside from current levels. Meanwhile, the highest price target indicates a 22% gain is possible. Even the lowest price target of $74 per share implies that shares can gain 10%.
Signet Jewelers (SIG)
Signet Jewelers (NYSE: SIG ) is the largest retailer of diamond jewelry. It operates more than 2,700 stores under various brands. Kay Jewelers, Zales, Jared, and Banter by Piercing Pagoda are some of the brands under the Signet corporate umbrella. The company generates $7.2 billion in annual sales. The stock is down by 18% year-to-date but has surged by 356% over the past five years. SIG shares currently trade at a 7 P/E ratio and come with a 1.38% yield.
Signet Jewelers makes money from diamond jewelry, watches, and other luxury products. Some of the company’s brands are household names that should capitalize on the high compounded annual growth rate of the fashion industry.
Wall Street analysts believe that the stock can march higher. The average price target suggests a 35% upside from current levels. The stock is rated as a Moderate Buy, and the highest price target of $125 per share implies a 48% upside. These price targets were updated in mid-June.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, Marc Guberti did not have (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.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.
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