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It's a good time to be Michael Kors--his company is about to be listed on the New York Stock Exchange, with an IPO of $17 to $19 per share, which values the company at an estimated $3.6 billion. It's also a pretty good time to be a shareholder in a number of major fashion brands, and we got an expert to weigh in on which are worth investing in right now.
Hitha Prabhakar, author of the just-released book Black Market Billions: How Organized Retail Crime Funds Terrorists (FT Press) and a retail reporter for Bloomberg Television, regularly dishes with analysts and scours earnings reports for the latest market dish, and we asked her to weigh in with her expertise on which stocks you should be getting in on now:
$KORS: "If Michael Kors does go public, it's doing so at a time when the luxury market is flourishing," Hitha says. "Look at Ralph Lauren and Coach stock-- two companies that are in its peer group. Both companies have for the most recent quarters out performed analyst estimates."
$RL: The latest earnings report places Ralph Lauren's sales about 24% higher than they were a year ago, which makes the company a no-brainer. "Analysts I've spoken to find this stock interesting because the company is not only able to increase the cost of products like sweaters and handbags, but the demand is there," Hitha says. "In the same earnings call, management reported a double digit growth in all of its major geographic areas including the US, Asia, and Europe." Experts also stay iconic brands are safe bets.
$TIF: Ask any girl whose jaw has dropped when receiving that robin's egg blue box, and she'll tell you Tiffany & Co. is a worthy investment. "In its last earnings call, profits went up 63%," Hitha says. "It did, however, caution that its next quarter may not meet the level that Wall Street was expecting to perform. That announcement dropped the stock price and analysts I spoke to think that means it's a perfect time to buy."
$COH: "We are seeing a theme here with coveted retail stocks and that is international growth as well as good sales," Hitha says. "Coach definitely has both, according to retail analysts. They plan on adding close to 30 outlets in mainland China by 2012. Lew Frankfort, the CEO of Coach told a bunch of journalists in Hong Kong last week that China represents the 'largest geographic opportunity' for the company." Over the past year, the stock has also increased in value by almost 16%.
$JWN: Nordstrom is a solid choice right now, thanks to their recent acquisition of HauteLook.com no-nonsense approach to spending. "When it comes to friends, jobs, and guys, stability is always a good sign," Hitha says, "and the same goes for a company like Nordstrom."
$WMT: After a serious dip in sales, WalMart is pulling out all the stops to try and gain back its market share, according to Hitha, and that means it'll soon be on the up and up. "I report on this stock extensively, and a lot of analysts I speak to are back and forth on this company, but right now most are for it."
$DG: Hot on its heels is Dollar General, an unexpectedly smart retail stock to invest in. Their bottom-line prices are threatening the WalMarts and Targets, "so much so that the stock has gone up almost 30% in the last year." Their full-year forecast also looks promising, meaning their earnings reports look really robust.
$AEO: As our STF readers can attest, American Eagle knows a thing or two about producing chic, affordable denim. In fact, they're selling so many pairs of jeans that they just increased inventory in anticipation that sales will continue to increase next quarter, making it a forward-thinking company that analysts are keen on.
$ZUMZ: Never heard of tween skate retailer Zumiez? Neither had we, but perhaps it's time to familiarize yourself. "Much like a Twilight character's emotions, sales have been fickle at this retailer but analysts are saying sales at this company are starting to stabilize," Hitha explains. "What's more, the retailer expects the good sales to continue according to its earnings release and when it comes to investors they like that kind of news."
$AMZN: "Amazon has the market cornered," Hitha says of this stock. They just got into the flash sale game with MyHabit.com, and they'll soon be in the groceries game, too, which means they'll be unbeatable on everything from baby blankets to new releases. The time to buy is now: "The stock price has gone up almost 8% in the last year," Hitha tells us.
There you have it, budding investors! Take this knowledge and go make your first million...and hey, wouldn't it be kind of awesome to say you actually own a piece of Michael Kors for less than twenty bucks!? We thought so.
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