Investors may be interested in companies that profit from Cupid’s bow and arrows as lovebirds around the world prepare to celebrate Valentine’s Day next week.
The National Retail Federation’s annual survey found the average U.S. consumer is expected to spend approximately $192.80 on Valentine’s presents for their significant others, children, teachers and classmates, coworkers, friends and even pets this year. This is up from $175.41 last year. Total spending is projected to reach $25.9 billion, which is an increase from $23.9 billion a year ago.
While candy, greeting cards and flowers remain some of the most popular gifts, the survey found those celebrating the holiday plan to spend a record $5.5 billion on jewelry and $4.4 billion on an evening out.
Since jewelry is one of the largest spending categories for the day devoted to love, investors may be interested in finding value opportunities among retail companies that sell luxury goods. According to the GuruFocus Aggregated Portfolio, a Premium feature based on 13F filings from the third and fourth quarters, luxury goods companies that are favored among gurus include Capri Holdings Ltd. (CPRI, Financial), Signet Jewelers Ltd. (SIG, Financial), Tapestry Inc. (TPR, Financial), Fossil Group Inc. (FOSL, Financial) and Movado Group Inc. (MOV, Financial).
Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
The New York-based fashion house, which owns brands like Michael Kors, Versace and Jimmy Choo, has a $6.22 billion market cap; its shares were trading around $49.44 on Friday with a price-earnings ratio of 9.35, a price-book ratio of 3.02 and a price-sales ratio of 1.22.
The GF Value Line suggests the stock is modestly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 79 out of 100, the GF Score indicates Capri is likely to have average performance in the future. Although the company had high ratings for profitability and momentum, its growth and financial strength ranks were more moderate and the GF Value was low.
Of the gurus invested in Capri, PRIMECAP Management (Trades, Portfolio) has the largest stake with 2.77% of its outstanding shares. David Einhorn (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies and several other gurus also own the stock.
Headquartered in Bermuda for tax purposes, the world’s largest retailer of diamond jewelry, which has well-known brands like Kay Jewelers, Zales, Jared and Diamonds Direct under its umbrella, has a market cap of $3.47 billion; its shares were trading around $76.32 on Friday with a price-earnings ratio of 12.31, a price-book ratio of 2.58 and a price-sales ratio of 0.51.
According to the GF Value Line, the stock is fairly valued currently.
Further, the GF Score of 78 suggests the company will likely produce an average performance going forward, driven by high ratings for momentum and profitability and more moderate financial strength, growth and GF Value ranks.
With 0.25% of its outstanding shares, Jeremy Grantham (Trades, Portfolio) is the company’s largest guru shareholder. Other gurus invested in Signet include Hotchkis & Wiley, Lee Ainslie (Trades, Portfolio), Cohen, Chuck Royce (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Barrow, Hanley, Mewhinney & Strauss. Ken Heebner (Trades, Portfolio), who previously was the largest shareholder, liquidated his firm’s assets in November, so his position no longer exists despite its presence on the guru shareholder list.
The New York-based retailer, which owns the Coach, Kate Spade and Stuart Weitzman fashion brands, has a $10.76 billion market cap; its shares were trading around $44.65 on Friday with a price-earnings ratio of 14.17, a price-book ratio of 4.77 and a price-sales ratio of 1.75.
Based on the GF Value Line, the stock appears to be modestly overvalued currently.
Tapestry is likely to have average future performance due to its GF Score of 74 on the back of high ratings for profitability and momentum, moderate marks for financial strength and low growth and GF Value ranks.
John Rogers (Trades, Portfolio) is Tapestry’s largest guru shareholder with 0.16% of its outstanding shares. The stock is also being held by Greenblatt, Cohen, Robert Olstein (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, Ainslie and Jeff Auxier (Trades, Portfolio).
Headquartered in Richardson, Texas, the company primarily known for its watches, but which also sells jewelry, handbags, luggage and other accessories, has a market cap of $232.23 million; its shares were trading around $4.48 on Friday with a price-book ratio of 0.59 and a price-sales ratio of 0.13.
Due to the bear market of 2022 punishing cyclical industries like retail, the GF Value Line suggests the stock, while undervalued, is a possible value trap currently. As such, potential investors should do thorough research before making a decision.
Additionally, the GF Score of 70 indicates the company has poor future performance potential. While it raked in high GF Value and momentum ranks, the profitability and financial strength ratings were more moderate and growth was low.
Of the gurus invested in Fossil, Simons’ firm has the largest stake with 3.27% of its outstanding shares. Royce, Paul Tudor Jones (Trades, Portfolio), Caxton Associates (Trades, Portfolio), Ainslie and John Hussman (Trades, Portfolio) also own the stock.
Based in Paramus, New Jersey, the high-end watchmaker, which is known for its minimalist style and signature metallic dot that marks 12 o’clock, has a $761.17 million market cap; its shares traded around $34.24 on Friday with a price-earnings ratio of 7.69, a price-book ratio of 1.59 and a price-sales ratio of 1.05.
According to the GF Value Line, the stock is fairly valued currently.
The GF Score of 77 means the company is likely to have average performance. Although it received high marks for three of the criteria, the GF Value rank was more moderate and the growth rating was low.
With a 7.81% stake, Royce is Movado’s largest guru shareholder. Other top guru investors include Mario Gabelli (Trades, Portfolio), Simons’ firm, Grantham, Hussman and Murray Stahl (Trades, Portfolio).
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Additional luxury goods companies that are broadly held by gurus include Compagnie Financiere Richemont SA (XSWX:CFR, Financial), LVMH Moet Hennessy Louis Vuitton SE (XPAR:MC, Financial), The Swatch Group AG (XSWX:UHR, Financial), Kering SA (XPAR:KER, Financial) and The RealReal Inc. (REAL, Financial).