Europe’s beaten-down luxury stocks have turned a corner the past two months, increasing the stakes for the earnings the companies are about to announce.

Speculation that China’s economic stimulus will lead to higher spending, and that Donald Trump will manage to boost US growth, has lifted a Goldman Sachs Group Inc. basket tracking the sector by 13% since mid-November, outpacing the broader market. Now investors need proof that the optimism was justified.

“What we really want to see is a sense of increased confidence,” said Nick Clay, a fund manager at London investment firm Redwheel. Investors want signs “that suffering has bottomed in the fourth quarter of last year.”

The first big test comes Thursday, when Cartier owner Richemont reports sales for the December quarter. Sector bellwether LVMH announces results on January 28, with Gucci owner Kering SA scheduled for February 11 and Hermès International SCA on February 14. Burberry Group Plc reports quarterly sales on January 24. 

There have been some early positives. On Monday, fourth-quarter sales from Italy’s Brunello Cucinelli SpA showed demand is holding up at the ultra-wealthy end of the spectrum, where customers can buy €17,500 ($18,000) cashmere and vicuña bomber jackets.

The stakes are high for investors. France’s LVMH is the region’s second-biggest company by market value, while Hermès and Richemont also have big weightings in national and regional indexes. That means a further rally in the sector could lift benchmarks across Europe after a year when many stocks got hammered by weak sales in China.

The sales and earnings reports due over the next few weeks are crucial because they reflect consumer demand over the Christmas shopping season.

Richemont, the owner of Van Cleef & Arpels, should benefit from growth in jewelry, which offers a “compelling price to value proposition,” according to TD Cowen analysts, who recently upgraded the stock to buy.

The bull case for the stocks at this point is that executives may signal they’re seeing early signs the market is in the process of bottoming. A dramatic improvement in fourth-quarter results is unlikely, given that the slump in China’s property market shows no signs of abating, while the rising cost of goods and materials could put pressure on company margins.

“The fourth quarter should still be a bit difficult,” Morningstar analyst Jelena Sokolova said. “It’s hard to see yet the inflection point.”

Judging by analyst ratings, companies serving the wealthiest section of society tend to be more in favor, given they are seen as more insulated from swings in the global economy. LVMH has by far the greatest number of analyst buy ratings at 26, according to data compiled by Bloomberg, followed by Richemont and Hermès.

Investors also will be keen to see how companies undergoing a revamp, such as Kering’s Gucci, Burberry and Hugo Boss AG, are faring. Overall, any indications that the industry’s recovery has legs will be most welcome.

Signs of a revival in growth are especially important now because valuations for luxury companies have ticked into slightly expensive territory. The buzz around some brands, such as Hermès and Prada SpA’s Miu Miu, may justify the higher price-earnings ratios.

“Those luxury companies with very strong brands — they are where the demand is,” said Helen Jewell, chief investment officer of fundamental equities EMEA at BlackRock Inc. “Where the brand strength is real, those companies have done incredibly well. It cannot be replicated. They have pricing power.”