Ferrari (NYSE:RACE) the Automotive Aristocrat

Ferrari (NYSE:RACE) the Automotive Aristocrat


FLASH: Ferrari is the Aristocrat of of world’s automotive sector and the world’s strongest brand.

Ferrari (NYSE:RACE) is an iconic Italian luxury Supercar manufacturer which produces the Ferrari branded car. It is a limited production in demand car and instantly recognizable world wide.

In Y 2018 only 9,251 Ferraris were shipped.

The group’s high end-market is driven by the growth and spending power of the world’s high net worth individuals.

Ferrari is not completely immune to the vagaries of the economic cycle. But, over the last few years the luxury market experienced a shift in how business was/is conducted.

Till then, much of the world’s wealth was concentrated in the United States, Europe and Japan.

The retail locations of most luxury goods manufacturers have been positioned in these regions. Yet, the embraceing of capitalistic economic policies has dramatically improved the standard of living in many Asian countries such as China, Malaysia, and India.

That these populations combined are 13X larger than the United States provides the luxury goods industry with many years, perhaps even decades, of growth opportunities that never before existed.

Ferrari management is keenly aware of the huge creation of wealth that is happening. And the Maranello Outfit has been expanding aggressively.

Its Asian dealer network has established a dominant position in the market.

Dealers are trained through the Ferrari Academy for sales, after-sales and technical activities.

Core focus is on Hong Kong and Mainland China where the expenditure on luxury content per high net worth individual is estimated at around 4X that of a Western high net worth individual. And, the company’s aggressive plans for expansion in the Asia-Pacific is aligned with the wealth that is being accumulated by the population of the nations in the region plus India.

Notes: Ferrari reported strong Y 2018 results and fundamentals are supported by the product mix and demand. Ferrari is categorized as an auto OEM, but should be and is now being seen as a luxury goods maker.

Although the shares trade at 31X Y 2019 earnings and the stock is not misunderstood by savvy analysts and investors, there are a range of value drivers which support it Northside potential.

HeffX-LTN overall technical outlook for RACE is Bullish to Very Bullish in here there is very little resistance here and none above 140.26.

Stay tuned…

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