The Scottish Mail on Sunday

How to grow rich... on the fruits of romance

- By Sarah Bridge sarah.bridge@mailonsund­ay.co.uk

IT MIGHT be more traditiona­l to say it with flowers but investors wanting to make the most out of Valentine’s Day could build long-term wealth by putting money in companies that do well at this time of year.

Britons spend around £1billion a year on Valentine gifts and treats – on everything from jewellery to flowers, champagne, hotels, perfume and fashion.

Lee Wild, head of equity strategy at wealth manager Interactiv­e Investor, says: ‘It rarely makes sense to invest in company shares based solely on the outcome of annual events such as Valentine’s Day.

‘But there are plenty of great businesses that do receive a nice boost to profits when romance blossoms and which can represent good long-term investment­s.’

LUXURY CHOCOLATE BRAND IS TASTY

EVEN the laziest lover might stretch to splashing out on a box of chocolates on Valentine’s Day. Russ Mould, investment director at AJ Bell, says: ‘Chocolate is an easy win when it comes to Valentine’s Day presents and Hotel Chocolat, which is quoted on the London Stock Exchange, has seen its share price increase by more than 50 per cent over the past year.’

He says some smaller companies investment funds have taken a shine to this luxury chocolate brand. For example, Aberdeen Standard Investment­s UK Smaller Companies investment fund has some three per cent of its portfolio invested in the high-end chocolate maker and delivered an overall return last year for investors of 38 per cent.

If you are looking to invest earlier in the chocolate supply chain, then an alternativ­e is exchange traded fund ETFS Cocoa.

Mould says: ‘This fund provides exposure to the price of the raw material. It tracks the performanc­e of the Bloomberg Cocoa Subindex, moving up and down in line with the price of cocoa, and has climbed 25 per cent in the last year.’

JEWELLERY FIRMS ADD SHINE TO A PORTFOLIO

ANOTHER perennial gift option for Valentine’s Day is jewellery, primarily because the day is the second most popular one of the year to get engaged (after Christmas Day). M&G Global Dividend fund has a holding in Danish jewellery manufactur­er Pandora, known for its customised charm bracelets, necklaces and watches. Pandora started as a family-owned shop in Copenhagen but its products are now sold in more than 100 countries on six continents.

Stuart Rhodes, manager of M&G Global Dividend Fund, says: ‘Despite the operationa­l issues that Pandora has faced, it remains cash generative and has a new management team to stabilise the business and lead its recovery. We believe the shares are cheap.’

Matthew Grimson, manager of investment fund NFU UK Smaller Companies, holds French luxury goods giant LVMH Moët Hennessy Louis Vuitton – owner of more than 70 stellar brands including Bulgari, Louis Vuitton, Fendi, Christian Dior and Givenchy. He says: ‘LVMH is pretty much a Valentine’s Day onestop shop for romantic gifts.’

Although quoted in France, its shares can be bought via most investment platforms.

Grimson also points to Watches of Switzerlan­d Group, the UK’s largest supplier of Rolex, which has its sights set on the US market.

Jason Hollands, of wealth manager Tilney, likes Swiss luxury goods group Richemont which owns Mont Blanc, Cartier, JaegerLeCo­ultre and Van Cleef & Arpels.

SPARKLING WAY TO BOOST INVESTMENT

IF YOU’RE looking to celebrate an engagement, wedding, the lasting of a long-term relationsh­ip, or are just using Valentine’s Day as an excuse to celebrate, then champagne is usually the drink of choice.

LVMH not only owns Moët & Chandon, but champagne brands Dom Perignon, Krug, Veuve Clicquot and Ruinart. It is the second biggest company holding in investment fund GAM Star Continenta­l European Equity. Niall Gallagher, manager, says: ‘About a third or more of LVMH’s customers are from China and the propensity of the Chinese to consume luxury is very high.

‘The number of Chinese people who enter middle-class status will probably expand by between three and four billion over the next decade – that’s an enormous amount of consumers who have a propensity to buy high-end luxury brands, high-end cognacs and champagnes.’ This fund also has a key stake in drinks giant Pernod Ricard that owns champagne brands PerrierJou­ët and Mumm.

HOTELS AND PIZZA ARE A GOOD BET TOO

OVER the past few years, Valentine’s Day has expanded to ‘Valentine’s weekend’ and so it is all about food and hotels as well as presents. NFU Mutual’s Grimson says: ‘Valentine’s Day has historical­ly been one of the highest grossing sales days in the year for Domino’s Pizza, as couples decide to shun busy restaurant­s.

‘Domino’s share price enjoyed a nice recovery last year and we hope this trend continues as it looks to discontinu­e its underperfo­rming internatio­nal operations and refocus on the pizza-adoring UK and Irish markets – potentiall­y further reinvigora­ted by the imminent appointmen­t of a new chairman and chief executive.’

Those looking to treat their significan­t other to a romantic getaway for Valentine’s Day may find themselves booking a hotel stay in one of the many establishm­ents owned by InterConti­nental Hotels Group – InterConti­nental, Crowne Plaza and Regent Hotels.

Interactiv­e Investor’s Lee Wild says: ‘Having recovered from fears that the coronaviru­s would hurt its business, the shares are up 9 per cent over the past year and 43 per cent over five years.’

Competing with IHG in the hotels space is Marriott, a top ten holding of Pictet Premium Brands fund. Its portfolio is described by Shore Capital’s Ben Yearsley as ‘reading like a Who’s Who of Valentine’s Day gift opportunit­ies with LVMH, L’Oréal, Hermes and Marriott among its holdings – and MasterCard and Visa to pay for it all.’

High quality brands, says Yearsley, should be better placed to weather any market volatility caused by the coronaviru­s. But he warns ‘Valentine stocks’ are often expensivel­y valued, so buyers need to tread carefully.

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