Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Michael Kors Holdings Ltd (KORS), Tiffany & Co. (TIF): Why Now Might Be a Great Time to Buy That Diamond Stock

Where luxury goes next
The thesis for investing in any one of these companies has to be broader than just “luxury is doing well.” For Nordstrom, it’s about the customer experience. For Michael Kors Holdings Ltd (NYSE:KORS), it’s the rise of the brand. At Saks Inc (NYSE:SKS), you might be interested in the rumored buyout. A Tiffany & Co. (NYSE:TIF) investment might hinge on a turnaround in the brand value. However, no matter what that specific thesis looks like, it needs to be underpinned by a belief in luxury’s growth potential.

There’s one big thing that makes me worry about investing in luxury stocks, right now — the slowdown in China. Not only does it bode ill for companies focusing on China, it’s going to have knock-on effects for domestic businesses. Spending by Chinese tourists overseas is third only to Americans and Germans. That spending is helping companies out, even if they have no locations in China, and a slowdown in the economy is going to slow that pipeline.

The reason to be hopeful about luxury stocks is that the American recovery is still unfolding. While the current crush may already seem unbearably long, the country is full of upside. That’s a longer-term view than some investors are happy with, though, and with the current quagmire in the federal government, investing in a positive outcome may seem like a bridge too far.

The article Why Now Might Be a Great Time to Buy That Diamond Stock originally appeared on and is written by Andrew Marder.

Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.