LVMH (NASDAQOTH:LVMUY) is the world's largest luxury company. Its sprawling portfolio of 70 brands includes fashion houses Louis Vuitton, Fendi, Christian Dior, Loewe, and Marc Jacobs; jewelry and watch brands like Bvlgari and Tag Heuer; retailers like Sephora and Le Bon Marche; and wine and spirit brands like Hennessy, Dom Perignon, and Moet & Chandon. It sells its products at 4,590 stores across 70 countries.

LVMH's stock nearly doubled over the past three years as demand for its luxury products rose in both developed and emerging markets. I think LVMH still has room to run after that multiyear rally, so I recently started a position in the stock. Here are my top five reasons for doing so.

A Louis Vuitton ad campaign.

Image source: Louis Vuitton.

1. Stable revenue growth across multiple markets

LVMH's revenue rose 10% to 46.8 billion euros ($53.1 billion) in 2018. On an organic basis, which excludes acquisitions and divestments, its revenue rose 11%. Here's how its core businesses fared.

Core Business

Percentage of Revenue (2018)

Growth* (YOY)

Fashion & Leather

39%

15%

Selective Retailing & Other

28%

6%

Perfumes & Cosmetics

13%

14%

Wines & Spirits

11%

5%

Watches & Jewelry

9%

12%

Data source: LVMH annual report. *Organic basis. YOY = year over year.

2. Global growth without the trade war

Its growth was also well-balanced across all four of its main regions. LVMH noted that its sales in China, which are included in its Rest of Asia region, "accelerated" in the fourth quarter of the year.

Region

Percentage of Revenue (2018)

Growth* (YOY)

Europe

29%

7%

United States**

24%

8%

Japan

7%

15%

Rest of Asia

29%

15%

Data source: LVMH annual report. *Organic basis. **Excludes Hawaii. (Other global regions generated 11% of revenues). YOY = year over year.

LVMH's growth in China defies the notion that its economic slowdown is impacting the consumption of luxury goods. Tiffany & Co. (NYSE:TIF) also recently reported "double-digit" sales growth in China during the holidays.

LVMH, which is based in Paris, isn't exposed to the ongoing trade war between the US and China. This insulates it from tariffs and retaliatory boycotts of American products.

3. Expanding margins and rising earnings

LVMH's gross margin rose 200 basis points to 67% in 2018 as its operating profit (from recurring operations) expanded 190 basis points to 21.4%. Those figures are significantly higher than Tiffany's gross margin of 63.1% and operating margin of 16.7% in the first nine months of 2018.

A bottle of Hennessy cognac.

Image source: Hennessy.

LVMH keeps expanding its margins for two reasons: It never marks down its items, and its core brands only face a handful of meaningful competitors in the high-end market. LVMH's year-over-year operating margin expansion was also well-balanced across its five core businesses:

Operating Margin

2017

2018

Fashion & Leather

31.7%

32.2%

Selective Retailing & Other

8.1%

10.1%

Perfumes & Cosmetics

10.8%

11.1%

Wines & Spirits

30.6%

31.7%

Watches & Jewelry

13.5%

17.1%

Data source: LVMH annual report.

LVMH's profit from recurring operations rose 21% to €10 billion ($11.3 billion) as its net profit climbed 20% to €7 billion ($7.9 billion). Those are solid growth rates for a stock that trades at about 23 times trailing earnings. LVMH's stock isn't cheap, but its steady sales growth and expanding margins justify that slight premium.

4. Free cash flow growth and shareholder-friendly moves

LVMH's free cash flow (FCF) rose 16% to €5.5 billion ($6.2 billion) in 2018. It spent about €3 billion on dividends and €800 million on buybacks and other operations during the year. It also reduced its net debt by 23% to €5.5 billion.

LVMH also raised its annual dividend 20% to €6 ($6.80) per share for 2018, which gives it a yield of 2.1%. It has hiked that dividend annually at an average rate of 14% over the past five years.

5. A recession-resistant stock

It might seem risky to invest in a luxury goods maker when the bears expect a recession within the next two years. However, the highest-end brands are generally more resistant to economic downturns than mid-range "affordable luxury" brands like Tapestry's (NYSE:TPR) Coach and Kate Spade. That's why we recently saw Tapestry's stock plunge after it reported less than 1% sales growth last quarter.

LVMH's stock will certainly drop during a marketwide downturn. However, it could also recover much faster than other stocks, as it did after the Great Recession.

A "good start" to 2019

LVMH declared that it got off to a "good start" in 2019, and remained "cautiously confident" about the rest of the year. Therefore I think it's a good idea to start a small position in this stock, then accumulate some more if a market downturn cuts its valuation to even cheaper levels.

Leo Sun owns shares of LVMH Moet Hennessy L.V. (ADR). The Motley Fool owns shares of and recommends Tapestry. The Motley Fool has a disclosure policy.