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3 of Cupid's Favorite Stocks
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ShareHeads up guys, Valentine's Day is just around the corner. While some are hopeless romantics who go all out and others just see it as a made up holiday to drum up business, the fact remains that it does just that.
Love and Money
Every year men and women open up their wallets and spend money on their significant others. Flowers, cards, dinners, jewelry, candy and plenty of other things. Even a basic flowers and dinner date can run well above $100. Love it or hate it, there are ways to profit from St. Valentine's Day.
Granted the economic enthusiasm, depicted by the S&P's historic rise over the past year, is waning but consumers are spending more now than they have since the beginning of the recession.
The Fail-Safes
While there are plenty of motives to buying jewelry, lets face it, the less creative we are feeling the more we end up spending. So jewelry is the first place to go. Tiffany & Co. (TIF) is a well known jewelry store famous for those little blue boxes. Shares of TIF carry Zacks's top ranking of #1.
On January 12th the company reported a 17% jump in sales over the holiday period. Same-store sales, a focal point for analysts, were up 8% in the period as well. This left management confident enough to raise their full-year outlook.
After the company raised its estimate, analysts quickly followed. The Zacks Consensus Estimate for fiscal 2010, which just ended, is now $2.05, up 11 cents on 12 revisions. Forecasts for 2011 are averaging $2.40, up 14 cents on 17 revisions.
While earnings are expected to contract about 12% this year, the 17% projected growth in 2011 would put Tiffany's above the $2.33 earned in 2008.
Another Zacks #1 jeweler is Signet Jewelers Ltd. (SIG), which operates under the names Kay Jewelers and Jared The Galleria of Jewelry. The company saw similar results when it reported sales figures for the holiday season.
Analysts and management were optimistic after they saw a 5.6% increase for the period. The Zacks Consensus Estimate for fiscal 2010 jumped 15 cents on the news, to $1.80. Next year's average estimate rose 9 cents to $1.89.
If the company hits these levels, year-over-year growth will be 15% and 5%, respectively. Signet is trading at a solid value as well. One share will cost you about 15 times forward earnings.
If you are looking for a bit more international exposure the Hong Kong based LJ International Inc. (JADE) may be the answer. The company distributes gemstone and diamond jewelry to department stores, jewelry chains and online retailers.
The Zacks Consensus Estimate for JADE rose 2 cents over the past couple months to 14 cents. Forecasts for 2010 are averaging 29 cents, also up 2 cents. These levels represent year-over-year growth of 27% and 107%, respectively.
Shares are a great value with a forward P/E of less than 10 times and price to book of 0.7. This is definitely the riskiest of the 3, but trading under $2.50, these valuations are mouthwatering. Currently JADE has a Zacks Rank of #1.
Be Sure to Thank Cupid
Regardless of your feelings about Valentine's Day it is a great example of capitalism and consumer behavior. So, whether or not you break the bank for the holiday, you can still profit from those who do.
Additional Resources
Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service
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| Market Summary | Feb 10, 2012 01:18 am ET |
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