If you like nice things like high-end watches, diamonds, and designer apparel — you’re not alone. Globally, luxury goods are a $282 billion market today. However, geopolitical issues in key markets including conflicts in the Middle East, economic instability in Europe, and democracy protests in Hong Kong have weighed on the luxury goods market recently, according to Reuters.

Therefore, it’s more important than ever that investors put their money to work in well-established brands with strong fundamentals. Below, I explain why Blue Nile, Kate Spade, and Coach are three of the best luxury goods stocks to own in 2015.

A diamond in the rough
E-commerce was the fastest growing channel for luxury brands last year, with sales climbing 28%, according to consultancy firm Bain & Co. Unfortunately, that hasn’t stopped Wall Street from punishing online jewelry retailer Blue Nile. Shares of Blue Nile have plummeted more than 21% so far this year. Yet, with the stock now trading around $27 a pop or toward the low end of its 52-week range, it creates an attractive entry point for patient investors.

Blue Nile’s price-to-earnings-growth rate of 1.8 is in line with the industry average, which tells investors that the stock is reasonably priced at its current level. By selling on the Internet, Blue Nile is able to reduce overhead costs and offer consumers competitive prices on thousands of certified diamonds and fine jewelry. This strategy has worked well for the company. Blue Nile’s net sales increased nearly 8% to more than $157 million in the fourth-quarter, despite what was a challenging quarter for many jewelry retailers.

The Street expects Blue Nile’s earnings to grow by as much as 16% in fiscal 2016. To put that in perspective, analysts project that rival jeweler Tiffany & Co will deliver earnings growth of 14% in its next fiscal year.

One of the catalysts for Blue Nile is that more consumers are realizing the cost benefits of buying diamonds and fine jewelry online today than ever before. In fact, a recent study by Wakefield Research found that Americans could save as much as 72% if they buy an engagement ring from an online retailer such as Blue Nile versus a traditional jewelry retailer.

On top of this, the average cost of engagement rings rose more than 4% to $5,855 last year. This important trend should work to Blue Nile’s advantage going forward, because engagement rings account for the bulk of the company’s total revenue. Moreover, Blue Nile’s engagement ring business grew 8% year-over-year to around $85 million in the fourth quarter. With the stock now trading around $27, I think this is a luxury goods name that will serve investors well in the quarters ahead.

A budding growth story
If there is a special lady in your life then you’re probably familiar with luxury design house Kate Spade. The company’s namesake apparel and accessories are sold both domestically and abroad through specialty retail stores, department stores, and outlet locations. Investors pushed shares of Kate Spade lower last month after the company delivered a mixed bag for its fiscal fourth quarter. As a result, the stock is now trading more than 20% below its 52-week high, thus creating a favorable entry point for long-term investors.

Kate Spade is tiny compared to rivals in the space such as Michael Kors. However, it is growing at an impressive clip these days. During the fourth quarter, Kate Spade grew its net sales 45% to $399 million, with full-year sales climbing 42% to just north of $1 billion in fiscal 2014. For comparison, Kors revenue grew 29% in its latest quarter.

Moreover, Kate Spade operates just 150 specialty retail stores worldwide today, compared to 509 retail stores for Kors. This creates an opportunity for Kate Spade to expand its brand both domestically and abroad in the years ahead.

The luxury retailer is also growing its e-commerce business. Kate Spade generated comparable online sales growth of 28% during the fourth quarter. Additionally, the company recently signed four new licensing agreements for its luxury home goods business. Kate Spade’s latest home collections will hit the market next month.

Ultimately, Kate Spade is quickly becoming a multichannel retail powerhouse with a loyal customer base. And at $33 a share the stock looks cheap today — particularly given its price-to-earnings-growth rate or PEG of 0.91, one of the lowest in the industry.

A worthy turnaround story
Coach may not seem like an obvious choice for this list of the best stocks to invest in luxury goods. However, the company’s ongoing turnaround strategy and updated product mix suggest it may be time to give the stock some attention. Increased competition from Michael Kors as well as slowing sales and weak margins led to a sell off in Coach shares last year. Nevertheless, Coach has put these setbacks behind it and is now focused on growth overseas and its new role as a lifestyle brand.

Coach generates the majority of its revenue within the United States. In fiscal 2014, for example, the North American market accounted for 65% of Coach’s total sales.

This creates an opportunity for the retailer to grow its brand overseas in key markets such as Asia and Europe. Having entered the European market only three years ago, Coach is just beginning to gain traction there. The company recently opened its first Modern Luxury flagship store in Paris, and plans to add more stores throughout Europe in the year ahead.

Meanwhile, the company surpassed $500 million of sales in China during fiscal 2014, and continued to gain share in Japan. In fact, Coach has grown its sales in Japan over the past decade even while many of its rivals saw sales decline in the region, according to data from Morningstar.

In addition to international expansion, Coach is also investing in new product categories such as menswear and expanding existing ones such as footwear. In early 2015, the retailer agreed to acquire luxury shoe maven Stuart Weitzman for a reported $574 million. Stuart Weitzman’s sales are growing at a 10% compounded annual rate. This plays into Coach’s renewed focus as a ‘lifestyle’ brand while also exposing the retailer to fresh growth.

The takeaway for investors is clear: Coach, Kate Spade, and Blue Nile are all attractively priced stocks today, backed by strong brands and loyal customer bases. For these reasons, I think these are three of the best luxury goods stocks available to investors in the current market.

Source: The Motley Fool