Can this ASX 200 stock deliver 'double-digit growth' for many years to come'?

This could be a sparkling opportunity to invest in.

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A woman stares directly ahead wearing diamond earrings, diamond necklace and diamond bracelet. as the Lovisa share price rises

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There aren't many S&P/ASX 200 Index (ASX: XJO) stocks that are growing internationally as much as jewellery business Lovisa Holdings Ltd (ASX: LOV) is. One fund manager thinks that the business is a long-term opportunity.

The business aims to provide on-trend fashion jewellery at "ready-to-wear" prices. At the end of FY23, the business had a total of 801 stores, with 168 in Australia, 190 in the USA, 75 in South Africa, 47 in Germany and 44 in the UK. It has a small number of stores in a range of countries including Italy, Canada, Mexico, Spain, the Netherlands, Hong Kong and so on.

Why is the ASX 200 stock an opportunity?

The fund manager Monash Investors runs a number of different funds, including a fund aimed at ASX small-cap shares. The fund is aimed at investors with a high risk and return profile, with the fund being prepared to accept high risk in the pursuit of capital growth with a medium to long investment timeframe.

Monash Investors suggests that we're now near the end of increases in interest rates and that "this headwind on equity markets will fade". The fund manager said that while another one or even two rate increases are possible, "the heavy lifting has been done".

In September, the Monash Investors small cap fund suffered the pain of declines for ASX consumer discretionary shares, including Lovisa.

The fund manager said that the outlook for Lovisa (and a couple of others) "remains compelling, driven by stock-specific opportunities."

What's the opportunity with Lovisa? The ASX 200 stock has an "enormous" store roll-out opportunity according to the investment team.

The roll-out of these stores could be "lumpy", but it will "underpin strong high double-digit growth for many years to come."

How quickly can Lovisa grow its store count?

Lovisa itself has acknowledged that a key driver of growth is the continued global store roll-out. It opened 172 stores during FY23, taking the store network to 801 stores across 39 countries.

In FY23 it entered 12 new markets including Hong Kong, Taiwan, Namibia, Botswana, Mexico, Italy, Romania, Hungary, Spain and new franchise markets of Columbia, Peru and Morocco. It opened in Poland and Canada at the end of FY22.

In Australia, the ASX 200 stock said it had 168 stores at the end of FY23, yet in countries with much larger populations, its ratio of stores to people is much lower – in the USA it had 190 stores at June 2023, in the UK it had 44 and in Mexico it had four.

Lovisa share price valuation snapshot

According to the profit projections on Commsec, the Lovisa share price is valued at 25 times FY24's estimated earnings.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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