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Thursday, January 15, 2026

Europe in Focus: Luxury and Defence Sector Stock Picks

By Century Financial in 'Investment Insights'

Europe in Focus: Luxury and Defence Sector...
Europe in Focus: Luxury and Defence Sector Stock Picks

European Luxury Sector: Poised For a Rebound in 2026

Optimism is building that Europe’s luxury-goods sector can rally into the new year as signs point to better times for the continent’s flagship equity sector.

The luxury goods market is expected to return to 4-5% growth in 2026, after two disappointing years. This growth is aided by a shift to volume-led demand, more limited price rises, strong Q3 earnings, and the continued gradual recovery in China.

Major luxury-goods makers such as LVMH, Hermes, and Richemont could regain growth above the mid-single-digit industry average in 2026. Pricing should be clearer in 2026, likely limited to 2-3% rises, with tariff-linked price hikes largely implemented at the end of 2025. Higher volume can lift operating leverage and begin to repair the 2025 margin erosion.

Seven of the biggest luxury companies posted revenue growth in China in the quarter to September, up from three in June, with early signs of recovery supporting forecasts for a return to mid-single-digit growth in China in 2026. This follows two years of market contraction and a recent stabilisation. Chinese shoppers account for more than a quarter of annual luxury sales, and companies are set to lead a 4-6% China luxury-market revenue and profit rebound in 2026.

Name Sector 52 Week Low *Last Price ($) 52-Week High Market Capitalization (Billions) Discount from 52 Week High
Hermes International SCA Clothing and Accessories € 1,998.00 € 2,084.00 € 2,944.88 € 220.01 -29%
LVMH Moet Hennessy Louis Vuitton Clothing and Accessories € 436.55 € 633.90 € 762.70 € 315.48 -17%
Cie Financiere Richemont SA Luxury Items CHF 120.60 CHF 170.90 CHF 187.55 CHF 101.06 -9%
Name Total Analyst Recommendations Recommendation Consensus (Out of 5) Beta 30 Day Volume Primary Exchange Dividend Yield - Net (%) ISIN NUMBER
Buy Hold Sell
Hermes International SCA 13 16 1 3.77 1.39 49,099 EN Paris 0.77 FR0000052292
LVMH Moet Hennessy Louis Vuitton 21 14 1 4.06 1.45 316,553 EN Paris 2.05 FR0000121014
Cie Financiere Richemont SA 20 13 1 4.12 1.49 688,640 SIX Swiss Ex 1.76 CH0210483332

European Defence Sector: Defence Stimulus Provides Continued Tailwinds

European defence companies outperformed US defence stocks in 2025. The region is expanding its defence spending toward NATO's 3.5% of GDP goal which is driving growth. The tailwind should persist as Europe continues to invest in domestic production.

The companies are also poised for solid revenue and profit gains in 2026 as they execute on record backlogs. European companies will continue to outpace US peers as they ramp up orders for ground defence (military vehicles, artillery, ground combat weapons), fighter jets and air defence from the European bloc seeking to rebuild domestic capabilities amid a multiyear investment cycle.

The 2025 National Security Strategy rhetoric was notably sharp, likely to encourage the region to keep focus on spending 3.5% of GDP on core defence as the US pivots to Latin America and Asia-Pacific. Amid a rising Russian threat, Germany aims to reach this target by 2029, while other NATO members on the eastern region (Poland, the Baltics) are near or above the goal.

Name Sector 52 Week Low *Last Price ($) 52-Week High Market Capitalization (Billions) Discount from 52 Week High
RENK Group AG Defense € 18.60 € 60.47 € 90.34 € 6.05 -33%
Fincantieri SpA Machinery: Construction and Handling € 6.85 € 18.71 € 27.38 € 6.07 -32%
Rheinmetall AG Defense € 599.20 € 1,783.00 € 2,008.00 € 82.02 -11%
Name Total Analyst Recommendations Recommendation Consensus (Out of 5) Beta 30 Day Volume Primary Exchange Dividend Yield - Net (%) ISIN NUMBER
Buy Hold Sell
RENK Group AG 12 4 0 4.50 1.39 790,175 Xetra 0.69 DE000RENK730
LVMH Moet Hennessy Louis Vuitton 6 4 0 4.20 0.60 1,861,939 BrsaItaliana - IT0005599938
Rheinmetall AG 24 3 0 4.74 0.82 251,150 Xetra 0.45 DE0007030009
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