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Welcome to Profit Confidential • Tuesday, May 22, 2012

Eye Care Can Be Profitable

Friday, April 7th, 2006
By Mitchell Clark, B.Comm. for Profit Confidential

Long-time readers know of my affinity for choosing investment themes. I’ve always felt that a portfolio of speculative stocks (all stocks are speculative securities) should represent a mix of investment styles.

Some holdings should be growth plays, others should be value plays. You might have a few technical momentum trades as well as some long-term steady growers. A mix among different industries is always desirable and so is holding a blend of micro- cap to large-cap companies.

A mix of investment styles pays off over time because the broader stock market dynamics are always changing. It is difficult to get the market right year after year after year.

One investment theme that I feel strongly about over the next two decades is the eye care business. Not only is this industry very profitable, but age demographics point to solid demand for eye care services for many years to come.

A company that’s one of the best global players for consumer eye care needs is Luxottica Group S.p.A. (NYSE/LUX). It’s likely you know this company’s products. This Italian company operates nearly 5,500 optical retail stores mainly in North America and the Asia-Pacific region, selling premium eye glasses brands. The company’s brands include “Ray-Ban, Vogue, Persol, Arnette and REVO” and licenses “Bvlgari, Chanel, Donna Karan, Prada, Ralph Lauren,” and “Versace”. Retail distribution is done through the company’s own subsidiaries that include LensCrafters Inc., Sunglass Hut International Inc., and O.P.S.M. Group Limited.

The company maintains a wholesale network that reaches 120 countries, with a direct presence in 28 of the main eyewear markets worldwide. Luxottica’s eye care products are designed and manufactured at six manufacturing plants in Italy and one in China.

Recently, the company announced that its sales for the first quarter of 2006 would be up some 20% as compared to the first quarter last year. According to the company, the increase in sales resulted from strong wholesale and retail spending on its products. Wholesale sales to third parties for the quarter were up approximately 30%.

For a large-cap, global company with a market capitalization over $12 billion, a 20% gain in sales for just one quarter is a big deal. I think Luxottica is well positioned to be very successful for the next several years. The eye care business isn’t a fancy investment theme, but it is a profitable one.

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Profit Confidential AuthorMitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.

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