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We recently upgraded our recommendation on Tiffany & Co. (TIF - Analyst Report) to Outperform with a price target of $100, following the jewelry maker’s outstanding third-quarter fiscal 2013 performance. The company’s better-than-expected results came on the back of higher demand in the Asia-Pacific region. The company currently holds a Zacks Rank #2 (Buy).

Why the Upgrade?

We believe Tiffany is well poised to support sales and earnings growth in the long run by leveraging capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes. The company’s long-term growth prospects remain encouraging given its new product launches and focus on enhancing its geographic reach through store expansion program. It remains committed to achieve long-term objectives of at least 15% earnings growth and a 10% to 12% sales increase.

With four successive quarters of better-than-expected bottom-line results, it seems Tiffany has positioned itself favorably. The company’s fiscal 2013 earnings guidance is also encouraging. With the economy showing signs of recovery, we expect Tiffany’s robust performance to continue going forward.

Tiffany, which competes with Signet Jewelers Limited (SIG - Snapshot Report), continued its positive earnings streak by beating the Zacks Consensus Estimate in the trailing four quarters. The company posted a positive earnings surprise of 25.9% in the third quarter, 12.2% in the second quarter, 32.1% in the first quarter of fiscal 2013, and 2.2% in the fourth quarter of fiscal 2012.

The company’s global net sales grew 7% in the third quarter, following a 4% rise in the second quarter and 9% in the first quarter of fiscal 2013. Also, sales grew 4% in the fourth quarter of fiscal 2012.

Tiffany now expects total net sales growth in the mid-single digits for fiscal 2013. In constant currencies, total net sales are projected to increase in the high single digits.

Other Stocks Worth Considering

Other better ranked retail stocks that look promising and are expected to continue with their upbeat performance include Barnes & Noble, Inc. (BKS - Snapshot Report) and Michael Kors Holdings Limited (KORS - Analyst Report), both sporting a Zacks Rank #2 (Buy).

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