15 High-End Stocks with Lots of Potential Upside

The U.S. economy may be slowing, but the spending habits of wealthy Americans has bouyed the performance of high-end consumer stocks.

Citigroup’s (C) Living Large index of 15 high-end stocks slipped 1.70% in the third quarter of 2007, but appreciated 11.69% in the year-to-date, outpacing the broad market and the S&P 500 Consumer Discretionary sector.

Tobias Levkovich, chief U.S. equity strategist at Citigroup, said the top 20% of U.S. consumers in terms of income earners account for nearly 40% of all American consumer spending. He said this group spends more annually than the bottom three-fifths of income earners combined.

Furthermore, this group is less affected than lower income earners by the decline in house prices.

“Despite deep concerns about the housing sector, overall net worth amongst wealthier Americans is concentrated away from their homes as their portfolios tend to be more diversified, with equity market gains thus far in 2007 sustaining their ability to spend,” Mr. Levkovich said.

He said the ability for companies in this sector to maintain strength provided valuable growth opportunity in uncertain economic conditions. “Accordingly, we think that further upside potential is likely,” he said.

The Living Large index comprises American Express Company (AXP), Tiffany & Co. (TIF), Saks Incorporated (SKS), Estee Lauder Companies Inc. (EL), Coach, Inc. (COH), Royal Caribbean Cruises Ltd. (RCL), Wynn Resorts Ltd. (WYNN), Orient-Express Hotels Ltd. (OEH), Callaway Golf Company (ELY), Toll Brothers Inc. (TOL), Marinemax Inc. (HZO), Nordstrom Inc. (JWN), Steiner Leisure Ltd. (STNR), Tempur-Pedic International, Inc. (TPX), and Smith & Wollensky Restaurant Group Inc. (SWRG).

Comments

[User 108528:]

This article is simply FALSE. "appreciated 11.69% in the year-to-date."
Hello? these stocks are down huge YTD (as 1/20/08). Who is checking this stuff for accuracy? YTD perf of above stocks: AXP: -16%, coh: -17.6%, sks: -23.7%, TIF: -18.5%, rcl: -19.4%, its so bad I will stop here....the facts in the article above are simply vey wrong!!

2008 Jan 20 11:50 AM

[300mph:]

Apparently the author did not read the 1/14/08 Business Week article “Luxury Shoppers Shut Their Purses” – Pallavi Gogoi

2008 Jan 20 07:49 PM

[ArJ:]

I agree with both comments and the author. I know that the history of these companies has shown us that they have done well in the past. The author is referring to the years of investment. You don't buy stocks one day and sell them a day later. We all know that the economy has not been doing well so therefore everyone takes a hit. With above mentioned companies it's almost a guarantee that their stock will be the first to clime back up. I say now it's good time to buy and invest if you have patients to wait some time.

2008 Jan 21 10:30 PM

[ArJ:]

Well here we are just a couple of day later seeing Nordstrom (JWN) stocks back above $35.00 and they were at $28.00 5 days ago. WOW

2008 Jan 23 02:29 PM