Luxottica (Borsa Italiana: LUX) $LUX
Luxottica Group S.p.A. is the world's largest eyewear company.
Based in Italy, it is a vertically integrated designer, manufacturer, distributor and retailer of eyewear brands, including Lenscrafters, Sunglass Hut, Pearle Vision, Sears Optical, Target Optical, Eyemed vision care plan, and Glasses.com. Its best known brands are Ray-Ban, Persol, and Oakley.
Luxottica also makes sunglasses and prescription frames for designer brands such as Chanel, Prada, Giorgio Armani, Burberry, Versace, Dolce and Gabbana, Miu Miu, Donna Karan, Stella McCartney, and Tory Burch.
The company operates its retail segment principally through its retail brands, which include LensCrafters, Sunglass Hut, Pearle Vision, ILORI, The Optical Shop of Aspen, GMO, OPSM, Laubman & Pank, Oakley O Stores and Vaults, David Clulow, and its retail licensed brands, Sears Optical and Target Optical. The company wholesales in over 150 countries across five continents and has approximately 50 commercial subsidiaries.
Luxottica has a rare business model. Since 2008 it has converted 58 cents of every dollar of EBIT into free cash flow. This is the equivalent of a company with a 35% tax rate converting 90% of reported after-tax earnings into free cash flow. Luxottica was also paying interest during this time. And it was growing its sales at rates above nominal GDP growth. In the future, when Luxottica has no debt left and grows at a slower rate – it will convert more than 90% of reported earnings into free cash flow.
If you're looking for a stock to buy and hold forever – Luxottica is your stock. This is a perfect buy and hold forever stock.