The luxury goods business is enjoying an upswing, and that could be very good news for Tiffany & Co. TIF. Goldman Sachs analyst Lindsay Mann has upgraded Tiffany from Neutral to Buy and believes the company could be one of the major beneficiaries from an uptick in luxury spending.
All That Glitters…
“TIF offers unique exposure to a resurgence in luxury, driven by improved international tourist spending and a firming high-end U.S. consumer,” Mann explained.
She also predicts Tiffany management can give the company’s cash flow a shot in the arm by tweaking the company’s operations. According to Mann, lower diamond costs and better inventory management should provide support for Tiffany’s margins. Any increases in company cash flow could be put to use via stock buybacks.
Tiffany and its luxury peers such as Burberry and Louis Vuitton have already been benefiting from the rising net worth of wealthy U.S. spenders and an increase in travel spending as well. Burberry recently noted an uptick in Chinese tourist spending and strength in tourist spending in the U.K. Louis Vuitton reported strong performance in the Macau, China, market and “good growth” in France as well.
By improving management of working capital to reduce inventory days, increasing commitments to shareholder capital returns and enhancing brand performance, Mann believes Tiffany management could make a major positive impact.
Mann suggests…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
