A Few Companies that Are Mom Approved
Grant is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Moms are awesome, there is no doubt about that. At times they do become finicky and insist on something happening, and there is nothing the family can do about it. If it makes Mom happy, odds are its going to happen. With this thought in mind, I will cover three stocks that my mother is a strong supporter of, which in my eyes means they are potential investments.
Always by her side
Each year my mother purchases a Coach (NYSE: COH) purse. It seems crazy to me at the price they charge, but she loves them. A steady dividend payer, Coach is a higher-end brand with top products that include handbags. Wall Street had beaten down Coach before it reported results from its fiscal third quarter, with many fearing that Michael Kors (NYSE: KORS) was taking over the company's prime space. Coach surprised and popped 11% in a day, with same-store sales climbing 1%, contrasting a decline of 1.4% that had been foreseen by Wall Street analysts. It also beat estimates for revenue and profit.
Michael Kors has seemingly come out of nowhere in the past couple of years, building a new luxury brand that consumers are a big fan of - as are investors. Going forward, analysts see earnings rising 30% in fiscal 2014, followed by a 25% gain in fiscal 2015. This blockbuster growth is hard to find and surprisingly has not built up the price more, as Michael Kors currently trades at a 30 price-to-earnings ratio. Another encouraging fact is that the company is beating analyst's earnings estimates for the past (and only) six quarters that it has reported.
Comparing this to Coach, the latter company's stats remain strong with no debt, a 30% payout ratio, and a 16 price-to-earnings ratio even after the price jump. Even with with a global slowdown for many businesses, Coach reported that same-store sales continue to grow at a “double-digit” pace. In China specifically, sales grew around 40% year-over-year for the third consecutive quarter; it looks like Coach's growth story isn't quite over in my eyes. Michael Kors is a definitely a player to watch in this industry, but rock-solid Coach will continue steadily performing along with my mother's shopping habits.
They are just the best
When on vacation or out of town, my mom's hotel of choice is Marriott International (NYSE: MAR); in her words, it's "just the best." Though you may not agree with this statement, you cannot argue with a strong customer base that continues to return. In the upcoming year, Marriott expects a great year in North America due to consistently strong demand and pricing in its business. Unfortunately, with 3,700 properties in 73 countries and territories, the U.S. isn't all we need to look at.
Growth has slowed down in Europe, China, and Brazil and after many big events last year (such as the Olympics.) A lighter slate of events looks to slow down profit internationally. On a positive note, Marriott has decided to enter the budget-friendly hotel space in Europe, introducing Moxy Hotels. This positions Marriott well to profit in downtrodden Europe, even with the current sluggish economy. Analysts expect earnings to grow 19% in 2013 and 17% in 2014, giving merit to Marriot's the 22 price-to-earnings ratio. Though now may not be the best time to buy, Marriott is definitely a company to keep an eye on.
Living up to the hype
About a month ago, I asked my ever-exercising mother if she had ever heard of Lululemon Athletica (NASDAQ: LULU). She replied "I've seen them at the gym, but they are just so expensive." Go figure, a couple of days ago she came home with a change of heart and some Lululemon products. After testing them out, she exclaimed that her other workout clothes didn't even come close in comfort or performance. Now that I have a reliable product endorsement, lets dive into the stock analysis.
Lululemon has been beaten down lately by its lack-of-material yoga pants (costing the company approximately $60 million in sales) and the resignation of CEO Christine Day. Lululemon recovered from the former of these events but has recently sunk 24% after the news about Day. So this begs the question: buying opportunity, or the start of a bigger downfall?
Personally, I believe that Lululemon is just in a rut and after this year (8% projected earnings-per-share growth), the company will be back on track in 2014 (17% projected earnings-per-share growth). The stock is still pricey with a 35 price-to-earnings ratio, but when compared to fellow workout growth story Under Armour's(NYSE: UA)price-to-earnings ratio of 51 it seems like a bargain. Under Amrour's growth has been a lot more steady, but Lululemon definitely has the potential to get back on track. Even though investors are fearing the worst for this stock at the moment, now might be the ideal time to get in on this comfortable company.
I will definitely keep tabs on these three stocks in the upcoming months and consider an investment. Even though Mom might not be the financial genius in my family (she does hate math), she has provided some potential investments to better my portfolio. You never know where you might find the spark for your next investment, and online articles are not always the answer. When you stop and take a look around in your life from an investor standpoint, it is amazing the things that can pop out.
Michael Kors is one of today's hottest high-end fashion brands, and that's translated into one of the best-performing stocks in retail. But with all that growth, has the stock finally become too expensive, or is there still room left to run? The Motley Fool's premium report on Michael Kors gives investors all the information they need to make the right decision, covering the must-watch areas, opportunities, and threats to the company that investors need to know. To claim your copy, simply click here now for instant access.
Grant Hosticka has no position in any stocks mentioned. The Motley Fool recommends Coach, Lululemon Athletica, and Under Armour. The Motley Fool owns shares of Coach and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!