7 Best Sunglasses Stocks to Invest in 2017

The sunglasses industry is large and growing, giving the 7 best sunglasses stocks to invest in 2017 a lot of growth potential. According to an estimate, eyewear industry, which includes contact lenses, prescription glasses and sunglasses, has a total worth of about $90 billion and is estimated to reach $140 billion by 2020. Sunglasses represent a whopping 40% of the total purchases in the eyewear industry.

Italy-based Luxottica Group seems to be one of the only major manufacturer of sunglasses worldwide, but this trend is about to change. Several disruptive sunglasses startups are entering the market. Sunglasses industry is experiencing a vital shift towards digital technology. Last year, Spain-based startup Saldum raised $56 million for its digital-first, vertically integrated sunglasses called Hawkers. New York-based Warby Parker is perhaps the most rapidly expanding sunglasses company. The company is already breaking away market share from Luxottica. Warby Parker, which was founded in 2010, is famous for its affordable and fashionable frames and lenses. It is known as the “Netflix of eyewear.” Between 2013 and 2015, Warby Pakrer’s annual revenue nearly tripled from $35 million to over $100 million. The company kick-started by selling glasses online, but after getting immense popularity it opened brick-and-mortar stores. Two other notable companies in the sunglasses industry which are setting disruptive trends are Izipizi and Gentle Monster.

The sunglasses industry has a huge room for growth, as people are increasingly becoming aware of the negative effects of UV rays of sunlight, and importance of sunglasses in overall attire. Sunglasses exports to the US accounted for a massive 30.2% of overall eyewear exports in 2016, up by 2.7% as compared to 2015.

Sunglasses aren’t just becoming popular in young men and women. The elder generation is also a huge customer base of polarized sunglasses. Polarized sunglasses provide excellent UV filters, anti-glare effects and vision correction. Euromonitor estimates the global eyewear market will increase by 19% to be worth $136 billion by 2021, and a major chunk of this growth will come due to an increase in demand of glasses from ageing population.

After the launch of Snapchat Spectacles in 2016, companies around the world are hastening t product sunglasses which provide traditional looks and digital features.

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Having these growth prospects in mind, let’s take a look at 7 best sunglasses stocks to invest in 2017.

7. Luxottica Group SpA (ADR) (OTCMKTS:LUXTY)

Luxottica Group S.p.A. (LUX) comes last in our list of 7 best sunglasses stocks to invest in 2017 mainly because of a bearish hedge fund sentiment, but keep in mind that it is the world’s largest eyewear company which manufactures sunglasses for almost all the major brands available in the market. The Milan-based company, which was founded in 1961, is behind Ray-Ban, the household name in the sunglasses industry, having over 5% market share of the eyewear market. Luxottica acquired Ray-Ban’s parent company Bausch & Lomb’s eyewear brands in 1999 for $640 million, and turned it around drastically. In 2014, Ray-Ban accounted for a whopping 27% of Luxottica sales. The same year, the company’s CEO Andrea Guerra claimed in an interview that over half a billion people in the world wore sunglasses made by Luxottica. The company is swiftly crafting a monopoly in the $28 billion eyewear industry. In January, France-based ophthalmic lenses company Essilor agreed to be merged with Luxottica in a $49 billion deal. The new company, EssilorLuxottica, will have 140,000 employees and sales in more than 150 countries. EssilorLuxottica’s total worth is estimated at €46.3 billion. With practically no competitor in sight, the stock of the new company is set to soar in the coming months. A total of 5 hedge funds tracked by Insider Monkey are bullish on Luxottica Group S.p.A. (LUX), as of the end of the first quarter of 2017. The total value of stakes owned by these funds is $50.27 million.

6. Tiffany & Co. (NYSE:TIF)

Tiffany & Co. (NYSE:TIF) is a New York-based luxury company which sells jewelry and accessories. Tiffany’s eyewear products are also made by Luxottica. Tiffany’s sunglasses line ‘Aria’ is really famous among women. It has three sun and three optical models featuring a single theme. Tiffany’s sunglasses are relatively expensive, and start from over $150 on Amazon. Out of the total funds in Insider Monkey’s database, 26 funds were long Tiffany & Co. (NYSE:TIF) at the end of the March quarter, compared to 29 funds a quarter earlier. The total value of these holdings is $1.22 billion. Barry Rosenstein’s JANA Partners is the biggest of these shareholders, with an ownership of 5.67 million shares of the company.

5. Michael Kors Holdings Ltd (NYSE:KORS)

Michael Kors Holdings Ltd (NYSE:KORS) is a London-based fashion brand which is famous amongst men and women for its accessories, clothing and jewelry. Michael Kors’s sunglasses and eyewear are immensely popular worldwide. Michael Kors’ sunglasses usually start from $60, and goes up to $220. In January 2015, Michael Kors announced a licensing agreement with Luxottica for its eyewear products. The agreement will last for 10 years. Michael doesn’t disclose exact revenue it earns from its eyewear business. Its product licensing segment consist of eyewear, jewelry, and fragrances. In fiscal 2017, revenue from licensed products declined to $145.8 million from $173.3 million a year earlier. A total of 28 hedge funds in our data held long stakes in Michael Kors Holdings Ltd (NYSE:KORS) at the end of March. The aggregate value of these holdings is $285.64 million.    Cliff Asness’ AQR Capital Management owns 2.28 million shares of Michael Kors.

4. Ralph Lauren Corp (NYSE:RL)

Ralph Lauren Corp (NYSE:RL) is one of the most famous fashion companies in the world. It’s one of the 7 best sunglasses stocks to invest in 2017 because Ralph Lauren has a gigantic customer base around the world. The company offers decent sunglasses in budget. For example, you can buy Ralph Lauren’s Polarized Square sunglasses for just $89 on Amazon. In 2016, the New York-based company renewed its licensing agreement with Luxottica Group for development, production and worldwide distribution of sunglasses and prescription frames. The new agreement extends to March, 2027. 39 hedge funds in our database own $4.07 million worth of stakes in Ralph Lauren Corp (NYSE:RL), as of the end of the first quarter.

3. Costco Wholesale Corporation (NASDAQ:COST)

Next on our list of 7 best sunglasses stocks to invest in 2017 is Costco Wholesale Corporation (NASDAQ:COST), which is swiftly consolidating its footprint in the eyewear industry. The world’s second largest retailer has special eyewear and sunglass centers worldwide. Costco’s eyewear business is known as Costco Optical. In 2015, Costco Optical reported a revenue of $915.2 million. Costco’s glasses are extremely cheap as compared to other brands. You can buy a decent lenses with frame from Costco under $190. Costco’s ecommerce platform enlists several best-selling sunglasses brands, including Maui Jim, Serengeti and Stella McCartney. At the end of March, 46 hedge funds tracked by Insider Monkey reported owning shares of Costco Wholesale Corporation (NASDAQ:COST). The net worth of these shares is $2.35 billion.

2. Wal-Mart Stores Inc (NYSE:WMT)

Surprisingly, Wal-Mart Stores Inc(NYSE:WMT) is a major player in the eyewear industry, and a potential threat to juggernauts like Luxottica due to its strong hold on the distribution channels. According to a report by Vision Monday, Walmart earned over $1.7 billion through eyewear sales in 2015. Most of the sales came from Walmart Vision Center, which comprises of about 3000 company’s own units. In 2015, Walmart opened some 263 new vision centers, where independent optometrists operate private offices and provide comprehensive eye exams, lens fitting, prescriptions and glasses recommendations. Walmart is America’s biggest producer of finished prescription eyewear. The company entered into the optical business in 1991, with a differentiating factor of providing value for money. At the end of the first quarter, 48 hedge funds in our database were long Wal-Mart Stores Inc (NYSE:WMT), compared to 54 funds a quarter earlier. The total value of the shares held by these funds is $3.879 billion.

1. Amazon.com, Inc. (NASDAQ:AMZN)

Amazon.com, Inc. (NASDAQ:AMZN) is not a sunglasses company, but it’s become a major player in the sunglasses segment amid a huge influx of new entrants which are selling high quality sunglasses and eyewear products in cheap rates. Amazon is swiftly changing the trends of shoppers worldwide. The company’s platform is littered with a plethora of options for sunglasses enthusiasts. For example, some of the bestselling sunglasses for men on Amazon are made by new companies like Joopin, Duduma, Luenx, PolarSpex and Merry’s. Similarly, sunglasses made by relatively unknown companies like SojoS and Retro Rewind are far more popular than Ray-Ban in the women’s sunglasses section on Amazon. Small sunglass manufacturers are disrupting the market by introducing new, trendy products which instantly get famous amongst the millennials. For example, colorful Polarized Sunglasses, Cat Eye Sunglasses and Aviator Wayfarers are selling like hotcakes on Amazon. Of the 676 funds tracked by Insider Monkey, 129 were bullish on Amazon.com, Inc. (NASDAQ:AMZN), as of the end of the first quarter.    The net worth of Amazon shares owned by these funds is $15.54 billion. Michael Larson’s Bill & Melinda Gates Foundation Trust owns 11.60 million shares of the company.

That wraps up our list of the 7 best sunglasses stocks to invest in 2017.

Disclosure: None