There is truly not a single sector of the economy that is not at risk of being disrupted in this day and age—including, believe it or not, diamonds. Precious gemstones are now being made in labs, and the companies involved could benefit greatly from this. So, what are some of the best diamond stocks with a synthetic twist to buy now? Read on to find out.
Best Lab Grown Diamond Stocks
LVMH Moët Hennessy Louis Vuitton ADR (OTCMKTS: LVMUY)
Louis Vuitton Moët Hennessy is a luxury goods conglomerate and the house of the world’s richest person Bernard Arnault.
The umbrella owns several well-known luxury brands in the fashion, watch, and diamond jewelry industries.
LVMH had not previously been involved in the manufacturing or selling of lab-grown diamonds. But it has recently entered the market with an investment in an Israeli-based lab-grown diamond company named Lusix.
Lusix announced that it would use the $90 million investment from the luxury multinational to develop a new facility powered by solar.
That’s correct. Lusix is also the world’s first lab-grown diamond producer that uses solar energy.
The move might surprise some, considering the stance on lab-grown diamonds by LVMH’s subbrands like Tiffany & Co.
Tiffany has publicly expressed its opinion on synthetic diamonds stating that “lab-grown diamonds are non-luxury materials.”
But Tiffany is not the only pro-natural stone brand under the LVMH umbrella. Bulgari and Chaumet are also in high favor of naturally sourced stones.
Nevertheless, it appears the parent company is looking forward and embracing innovation and anticipates the markets will do the same.
In a different move, the CEO of TAG Heuer, another LVMH brand, recently launched a $360,000 watch featuring lab-grown diamonds.
LVMH is arguably the world’s most prestigious and diverse luxury goods conglomerate. Its embrace of lab-grown diamonds is a good sign that the synthetic gemstone industry is beginning to take shape.
Indeed, the company is not a lab-grown diamond pure-play. But its influence and sales outreach might be sufficient to make a significant splash in the industry.
The company reported record-breaking revenue of $79 billion euros just last year, up 23% from the year prior. Justifying their position as the big fish in the small pond of luxury.
While this company is not a pure play in the lab-grown diamonds segment, its diversification could play in your favor. Shares of LVMH have outperformed the market and delivered excellent returns for investors.
Since the 2008 market bottom LVMH has returned over 1500% to investors. More impressively, the luxury company just printed a new all-time high.
While shares of LVMH did see a small decline during 2022, its impressive recovery is certainly one to keep an eye on.
As it’s the case with many foraging companies traded in the US, LVMH is offered as an ADR over the counter.
American Depository Receipts (ADRs) allow American investors to invest in foreign companies without buying shares directly in foreign markets.
Adamas One Corp (NASDAQ: JEWL)
Adamas One is a pure-play lab-grown diamond company that develops, produces, and sells synthetic gemstones.
Known as the Original Lab-Grown Diamond Company, Adamas is recognized as a leader in the industry.
The Company holds 36 patents on the production of lab-grown diamonds, including a proprietary development method of production. JEWL produces both jewelry and industrial-quality diamonds.
The company’s proprietary manufacturing method is known as chemical vapor deposition (CVD).
This method is used to grow gem-sized and smaller diamond crystals. It involves creating a diamond seed and then using a gas mixture to grow the diamond atom by atom.
One of the great advantages of CVD is the technology’s potential for scalability. Being easier to scale, technology has the opportunity to grow rapidly and allows for quick company expansion.
The company’s ability to scale is ever more critical, especially when considering that lab-grown diamonds are the fastest-growing segment in the luxury goods industry.
Players involved must be able to scale fast if they want to meet growing demand.
But despite its footprint and relevance within the market segment, Adamas remains a small micro-cap stock. Adamas’ stock market cap comes at a mere $17.4 million.
However, this could offer exponential growth opportunities for shareholders. The global diamond industry was valued at $95 billion in 2021.
If the company can capture even a fraction of that, investors could be in for big gains.
The stock price has been on a downward spiral since its IPO in 2022. But we can all agree that was probably not the best timing for an IPO considering the macroeconomic conditions.
Signet Jewelers Ltd (NYSE: SIG)
You might not be familiar with the name Signet Jewelers. But Zales, Kay Jewelers, Jared, and Piercing Pagoda might ring a bell. These are all companies that operate under the Signet umbrella.
Signet is yet another diamond retailer that is embracing lab-grown diamonds. The company is leveraging synthetic gemstones to appeal to environmentally mindful consumers.
In 2020, the company leaped to include an appendix for Laboratory-Grown diamonds as part of their Signet Responsible Sourcing Protocol.
The appendix requires all suppliers to ensure that their synthetic diamonds are in accordance with international standards.
Since then, shares of the company have returned nearly 2000% from their 2020 bottom to their 2021 peak. However, SIG shares and the rest of the market have retraced since.
Looking forward the company’s subbrands are offering lab-made gemstones as part of their inventory.
Jared, for example, has even released a full bridal collection that allows couples to design their engagement rings. Kay Jewelers has also implemented a similar offering for brides.
Are Lab Grown Diamond Stocks a Good Investment?
Investing in lab-grown diamonds can offer an excellent growth opportunity as the sector sets out to disrupt the gemstone industry.
Diamonds are the world’s most popular gemstone, with a global market size of over $95 billion.
While their synthetic next of kin only amounts to a quarter of the global value. Offering plenty of market share to take over by their natural counterparts.
But do the novel synthetic gemstones have what it takes to take over the old guard?
Diamond mining companies like Gem Diamonds, Anglo-American, and Rio Tinto could be worried about it.
According to scientists, synthetic diamonds are chemically, optically, and physically identical to the world’s best-mined diamonds. Offering no real difference when it comes to quality and look—same dish, different cooks. We’ll call that a tie.
Regarding capital costs, it’s a tough call to answer. The investment needed to produce lab-grown diamonds is similar to that of nature.
However, synthetic diamonds might take the lead as they have a significantly shorter supply chain, offering lower costs. By touching fewer hands along the way, lab-grown diamonds result in a less expensive end product.
But, costs might not be the most appealing sell point for buyers of lab-grown diamonds.
The environmental impact that the industry has appealed to the younger generation and is one of the industry’s strongest sell points.
A marketing advantage that might come in handy to save the diamond industry from the loss of interest from Millenials.
In short, synthetic diamonds are not only great for jewelry and industrial uses but also the environment. All compelling reasons to believe that the industry could gain a larger market share than its natural counterpart.
If so, we could see the synthetic diamond industry double or even quadruple in size over the next few years. This offers investors a chance to earn a compelling profit from increasing market demand.
Now that you know more about these lab-grown stocks, you might want to add one (or more) to your portfolio.
FAQS
Who Is The Largest Producer of Lab Grown Diamonds?
The largest producer of lab-grown diamonds in the world is a company in Belgium called Stone Lab Grown Diamonds. This comes as no surprise considering Antwerp is the world’s diamond capital. Its diamonds are certified and have the same characteristic as rough diamonds.
Can You Invest in Lab Grown Diamonds?
You can invest in lab-grown diamonds in more than one way. Conservative investors can opt to purchase the diamonds straight out and store them for future sale. However, those wanting to capture a larger share of the pie could opt to buy lab-grown diamond stock.
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