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Stock Buyings Shifts Its Focus Towards Women
Posted by: Jae Jun (IP Logged)
Date: October 10, 2012 03:44PM
If you have a woman in your life, you know that she makes up for more than just half.
Women today are now more affluent and influential and for every dollar spent in the U.S., $0.80 comes from a woman.
Quote:The Core Female Market Right in Front of Your Eyes
The manly image that many companies have held must be changed in order to increase revenue. There is a potential market for many companies walking through their stores every day.
Take Sprint (S) for example.
Here’s a case study I found on how Sprint has identified this core market and put things into action.
Quote:Nordstrom (JWN) is another place where women love to shop. Prices are higher, but the customer experience and emotional service provided makes it the go-to place for women.
Quote:Find Stocks That Are Tilted Towards Women
Looking for some new ideas or simply want to learn about a new industry?
Then why not look into companies where the women are the major focus.
The immediate thought is beauty and fashion such as cosmetics, handbags and other luxury goods, but there are more categories that you may not have thought of.
I certainly won’t be able to go through everything, but here’s a taste of what you can start thinking about and looking into.
Beauty and Fashion Stock
As the middle class in emerging countries rises, this category will see a lot of action.
L’Oreal (PINK:LRLCY) is a France-based company only listed on the pink sheets in the U.S., with low volume and huge market cap that is not well followed in the U.S.
Just an FYI, there is a 1.33% disconnect between the pink sheets and the stock on the French index.
A luxury goods company that women love is LVMH Moet Hennessy (PINK:LVMUY), best known for its Louis Vuitton brand. Asia and particularly China are a huge market for luxury brands. As I mentioned earlier, the rising middle class in emerging markets is a huge market for luxury goods brands.
Or how about Coach (COH)? Something local and cheaper than LVMH. It also has a solid dividend at 2.18% with a EV/EBITDA of 9 and P/FCF of 20.
Women not only take the bigger share of raising children, but also pets. They are the ones that usually buy toys, clothes and other accessories for their pets.
Petmed Express (PETS) is an online pet pharmacy that has traded in value territory since the end of last year due to increased competition. The 5.81% dividend is an eye catcher and the company has increased its FCF which allows them to increase the dividend without resorting to debt or keeping it stagnant.
Petsmart (PETM) is a pet store chain and has been on fire since 2009. Pet food, supplies and other related products have seen price increases, but for some reason, owners are not very price sensitive when it comes to their pets. From my personal behavior, I’ve noticed that I will cut back on my spending more than for my pets.
My dog groomer charges $70, but my wife refuses to let me shave the dog. The dog wins over me every time.
Considering the impressive performance over the last few years, EV/EBITDA is still only 9.9 with a healthy ROA of 14.4% and ROE of 29%.
Women are the CEOs of the home. They work, juggle family, parenting, house chores and more. The home is also decorated by the woman.
That’s where companies like Home Depot (HD) and Bed Bath and Beyond (BBBY) come in.
More women now visit stores like Home Depot and there is a healthy mix of female employees in my local stores. It is a lot less stressful for my wife to ask other women instead of receiving an answer in technical jargon and feeling dumb.
On a different note, home builders have bounced back this year. The SPDR S&P Homebuilders index (XHB) is up 46% year to date and since I don’t think trying to get into home builders is the best choice at the moment, companies like Home Depot and Bed Bath and Beyond are interesting alternative plays.
Disclosure: No positions
Stocks Discussed: S, HD, JWN, COH, BBBY,