Fashionable Profits: Lee, Wranglers & Timberland

04/12/2017 2:50 am EST


Ian Wyatt

Publisher & Chief Investment Strategist, Wyatt Investment Research

We’ve been pounding the table for VF Corp. (VFC) shares since our initial December recommendation. We continue to pound to this day, asserts income and growth stock expert Ian Wyatt, editor of High Yield Wealth

VF shares are up 10% over the past two months. That said, they still trade below our initial recommendation price of $56.55. Since our initial recommendation, VF shares have traded mostly down, and we believe wrongly so. 

VF Corp. is the largest apparel maker in the world. It manufactures and sells under the brands Lee, Wrangler, Vans, The North Face, and Timberland.

VF is also one of most tenured apparel makers. It has been around for 118 years. For 44 years of those years, annual dividend growth has been the norm. The latest dose of annual dividend growth was a 13.5% increase.

VF shares have been held in check by concerns over slower growth. For the fourth quarter, net sales at $3.3 billion were essentially flat for the year. EPS, at $0.97, was 3% higher than the year-ago quarter. 

We’re not particularly concerned. We see top-line growth kicking into gear in 2017. Following a decent close to 2016, VF management anticipates 2017 revenues to grow at a low-single-digit percentage rate.

VF shares should benefit from a weakening dollar in 2017. International revenues accounted for 34% of the company's total revenue in 2016.

The good news is that volumes across VF’s primary international markets are on the rise. If the volumes continue to rise and the dollar continues to fall, international sales reported in nominal dollars are guaranteed to rise, and so will overall company sales. 

VF’s share price, in turn, will continue to rise. We would not be surprised if April provides the last opportunity to lock in a 3% dividend yield on a genuine dividend aristocrat.

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