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Investing.com -- Europe’s luxury sector is heading into 2026 with what UBS describes as a “less cautious stance” after two years of weakening earnings, helped by early signs of stabilizing Chinese demand and expectations for a return to positive organic sales growth.
In its latest sector outlook, UBS highlights two names as its top picks: Compagnie Financière Richemont (CFR) and LVMH, both rated “buy.”
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The brokerage cites continued strength in jewellery and brand-specific initiatives as the reasons these stocks stand out in a still-fragmented luxury landscape, where momentum remains uneven across categories and regions.
Richemont
UBS places Richemont among its most preferred stocks, pointing to the company’s ongoing share gains in jewellery, a category the brokerage says has outperformed and remains one of the sector’s most resilient.
UBS flags Richemont as one of its two top picks for 2026, noting that jewellery was the “key driver” of its stock preference over the last two years.
Recent performance data show Richemont’s sales trends have been stronger than many peers in key regions. In the European cluster, Richemont posted retail growth of over 20%, mid-teens%, and high-teens% across the first three quarters of 2025, according to UBS estimates.
The brokerage also shows Richemont trading at CHF169.80 as of Nov. 26 and carrying a 12-month
UBS price target of €176, with the analysts’ 2026 sales estimate of €23.93 billion, up 1% year over year.
LVMH
LVMH is UBS’s other top pick for the year ahead, supported by what the brokerage describes as “brand-specific initiatives” that differentiate the group during what remains an early-stage recovery in sector demand.
UBS recently upgraded LVMH to “buy” and maintains it as one of the two preferred names heading into 2026.
LVMH’s underlying performance shows steadier but slower trends than Richemont in several regions. In the European cluster, its Fashion & Leather Goods division grew LSD–MSD% across 1Q-3Q25.
For the current fiscal year, UBS estimates FY25 sales of €80.44 billion, roughly flat versus consensus.
The brokerage also expects LVMH to benefit from the broader sector outlook, which includes anticipated over 5% organic sales growth in 2026 after a flat 2025, driven by returning volumes and stabilizing trends among Chinese and American consumers.
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