Leeb: Breakfast at Tiffany's
11/29/2002 12:00 am EST
"Third quarter profits were strong and the most reliable indicator of profit growth - i.e., core commodity prices ex-energy and food - is rising at one of the fastest rates in the past 20 years," says Stephen Leeb, editor of Personal Finance. "Throw in the continued strong gains in productivity, and you can see we expect the economy to surprise on the upside and why the recent market rally should have very long legs." As shoppers add the famous Tiffany blue box to stockings, investors may want to consider the retailer for their portfolios.
"Tiffany (TIF NYSE), a holding in our Growth Portfolio, is a likely winner in the upcoming market environment. It is solid in its own right, with a good balance sheet. Tiffany, the world’s premier high-end collectibles franchise, has weathered the global economic downturn well, holding profits flat despite the depressing impact of the equity bear market on sales. Going forward, it will profit from the likely bull market in precious metals - as an industry highly leveraged to the rising economic growth likely under Bush spending priorities - as well as a revival in stocks, as market winnings boost demand for jewelry.
"The Tiffany franchise is small but has a long, celebrated history. During the next several years, profit growth should restore the company’s historical rate of more than 15%. Among the most profitable and best-managed specialty retailers in the world, Tiffany is a buy up to $30 per share. Overall, the stock should head much higher in the coming year."