A couple of years ago, I fulfilled a lifelong dream.
It may seem simple when you hear it. But for most of my life, pursuing a passion purchase was impractical for a few reasons.
For the past two decades-plus, raising my five kids came first. So, luxuries often took a backseat.
And then I hit a major setback… I lost almost all my money.
How that happened is a story for another day. But building it back up was a journey that reshaped me. I like to call myself Brad 2.0 now.
With a focus on safety and reliable income, I was able to put my wealth back together and support my family comfortably again.
My two oldest are out of college now. One is married and the mother of my first grandchild. Another is getting married this weekend! And my third is in college.
Now that my three oldest are adults and my finances are secure… I figured it was a good time to finally make my dream a reality.
What was this dream? To own a Porsche.
Today, I’m happy to say I own two. And, boy, are they amazing cars!
Brad with his newest car, a Porsche Panorama
I’m thrilled I was able to reach my dreams through my “Brad 2.0” strategies. And I want to help you reach yours, too.
So, when I learned there’s an opportunity emerging around Porsche that has the potential to help you do just that… I knew it was something I had to look into.
Here at Intelligent Income Daily, my team and I research every sector, looking for income-producing opportunities… The kind that can help you achieve a relaxing retirement through any market conditions – with the car of your choice in the garage.
Today, I’ll go over what this opportunity is and why there’s more to the luxury goods sector than you may think right now.
There’s Still Demand for Luxury Goods
Everywhere you turn, it seems like everyone is afraid of inflation and a recession. But that doesn’t mean we’ve suddenly stopped shopping.
For one thing, the bottom of the shopping barrel – dollar stores – brought in hefty profits. Dollar General (DG) reported earnings of $2.98 this past quarter. That beat expectations by $0.05 and is $0.29 higher than the same quarter last year.
Obviously, inflation-inflicted, cash-strapped consumers are looking for bargains. But that’s not all… There’s a category of shoppers who haven’t been worried about that sort of thing at all.
Demand for luxury goods has remained surprisingly strong this year.
According to a study by Bain & Company, the world’s leading advisor to the global luxury goods industry, the sector grew by 13-15% (at constant exchange rates) in the first quarter of this year.
Compare that to the S&P 500, which decreased by 4.6% over the same time.
As the study’s lead author Claudia D’Arpizio said, “Despite significant macro-economic challenges, including hyperinflation, slowing GDP growth, and the Russia-Ukraine conflict… The personal luxury goods market proved resilient once again.”
And that’s not expected to change anytime soon. Statista estimates the $312.6 billion luxury goods market will grow revenues annually by 5.4% over the next five years.
So, people are clearly still valuing luxury goods and brand names. And those people will keep buying Porsches.
Because they can. And that brings me to the news the car company recently announced.
Keep This Spin-Off on Your Radar
Volkswagen, Porsche’s parent company, announced it’ll be spinning off the luxury brand into its own company later this year. It plans to do so via initial public offering (IPO).
More information should come out over the next few weeks. But as it stands, we’re looking at a projected company valuation between $60 billion and $85 billion.
The way things look, this IPO could become one of Europe’s largest listings ever.
For comparison, Ferrari’s market cap is just $38 billion. That competitor delivered 11,000 cars in 2021…
Porsche sold 300,000.
Here’s another positive fact about Porsche: It currently enjoys impressive operating and profit margins. That means it’s running its business smart, with profits easily outpacing costs.
(Though in all fairness and full disclosure, Ferrari is running on better margins.)
One of the biggest downsides is that, as far as I can see, there hasn’t been mention of Porsche paying out a dividend. And if there are no dividends, I can’t really recommend the stock on any of my platforms.
But here’s the thing: Volkswagen does offer them – with a hefty but healthy 5.30% yield. So, there is a good chance its spinoff will follow suit.
Right now, I’m watching and waiting to see what else Porsche offers from here.
In the meantime, you’d better believe I’ll be enjoying the luxuries I’ve worked hard for in my life for everything they’re worth. Which is a whole lot.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily