All-Star Analyst Dana Telsey Recommends TIF
All-Star Analyst Dana Telsey Recommends the Following Stocks: LTD, COH,TIF, And SPLS
CHICAGO, Jun 11, 2002 /PRNewswire via COMTEX/ -- Consumers are shopping for hot summer deals, while investors are shopping for hot summer stocks. 5-Star analyst Dana Telsey from Bear Stearns Companies, gives investors her insights into the retail sector and which companies should be on investors shopping lists this season. www.allstarpicks.zacks.com .
Here are the details on Analyst Dana Telsey's Stock Picks for today:
Limited Brands, Inc., (NYSE: LTD) formerly known as The Limited, Inc., sells women's and men's apparel, women's intimate apparel and personal care products under various trade names through its specialty retail stores and direct response (catalog and e-commerce) businesses. Most notably, Victoria Secrets, Bath and Body Works, and Express.
The company has been able to manage inventory levels and keep costs low by reducing the number of new stores being opened. This reduction in cost, along with the increased sales have kept operating margins above +15%. The ability to create 360o selling through the Internet, stores, and catalogs has been very profitable.
Coach, Inc. (NYSE: COH) is a designer, producer and marketer of accessories for men and women, including handbags, business cases, luggage and travel accessories, personal planning products, leather outerwear, gloves and scarves.
The company has more room to grow according to Telsey. There are around 400 real malls in the United States and Coach is currently in less than 200. There is also plenty of room to grow overseas, as Tokyo has been a great source of revenue. Japan is said to account for half of the world's luxury spending. As the Coach brand becomes more available, the company is looking for even greater sales growth.
The brand is appealing to customers and the sales have been very strong. The current EPS estimate for 2002 is $1.87 and $2.17 for 2003. Telsey has a 12-month price target between $56-$58.
Tiffany & Co. (NYSE: TIF) is engaged in the business of jewelry making and sales. The company has excellent inventory management and even better margins. The company doesn't put things on sale, so the margins tend to be higher. The prestige of owning a Tiffany piece of jewelry goes a long way.
Based on last years 4th quarter sales, things are looking bright for 2002. The fourth quarter is always the best given it will include Christmas sales. TIF's holiday period is defined by the November 1 - December 31 time frame, and typically accounts for approximately 80% - 85% of total fourth quarter sales.
TIF is a solid brand franchise with a global, multi-channel distribution strategy and tremendous room for growth. In difficult times, Telsey believes there is a flight to quality, something that TIF should benefit from given the strength of its brand. Tiffany's recent financial performance demonstrates the company s ability to effectively manage through a challenging consumer sales slowdown, as evidenced by 2001's continued strict expense control. TIF shares are currently trading around 27.7x 2002 EPS estimates of $1.26, and has a 12-month price target of $38.
Staples, Inc. (Nasdaq: SPLS) is an office supplies retailer with 1,436 office supply stores (as of 2/02) in the U.S., Canada, the UK, Germany, the Netherlands and Portugal. SPLS also operates catalog operations, a contract stationery business and e-commerce sites.
There are several factors that Telsey believes will help increase their gross margins:
First, improving the merchandise mix by focusing on selling to more profitable small business customers and power users should continue to improve the gross margin. Second, increasing the private label assortment should help fuel the gross margin. Third, SPLS is working to realize the most out of its marketing budget. Fourth, there is opportunity to bring the NA Delivery business margins up from their current levels given the fact that the Quill business is much more profitable than the Contract and Staples Business Delivery operations. Fifth, the company will focus on reducing product costs. Finally, the real estate team has also been challenged to reduce the company s rent expense.
She is looking for Long-Term Growth of 15% and estimates EPS to be $.73 in 2002 and $.87 in 2003. She has a 12-month price target of $23.
To get Dana's sector analysis and the complete article click: www.allstarpicks2.Zacks.com .
