BROKERS’ NOTES: Buy LVMH and keep your feet on the ground

Bright Khumalo, portfolio manager: Vestact

Buy: LVMH

We like the luxury goods sector, with the Covid policy relaxation in China being a tailwind. Chinese citizens can fly abroad again — they’ll go on holiday and patronise high-end stores in Milan,  Paris or New York to shop for such totems as handbags and jewellery. The big dog in the sector is LVMH. It’s diversified, it has 80-odd different brands across wines, spirits, watches and jewellery. Earnings in Southeast Asia should bounce back and may even hit new highs.

Many people were worried about succession at LVMH, but CEO Bernard Arnault is charting a very clear path for this within the group and at strategic brands such as Christian Dior, Fendi and Louis Vuitton.

Sell:  Virgin Galactic and Beyond Meat

I would avoid all of the meme stocks such as Virgin Galactic or Beyond Meat. Virgin Orbit’s recent effort to place satellites in orbit failed and it is still trying to prove the model. If you can’t get the basics right, it’s a big problem. I’m not saying it’s the end but it’s not looking good in terms of capital raises.

And the idea of helicopter money is behind us, so investors will be reluctant to take a punt because you’re looking at a Fed funds rate of above 5% this year. It doesn’t make sense to try to find the next thing that’s going to pop. Avoid.