Saturday, August 20, 2005

Tommy and others

Tommy Hilfiger (TOM) announced that it is looking at a possible sale of the company. I have been expecting this for a while, and had bought shares earlier at around $10/share. The stock is now at $17.5 and will likely fetch atleast $19/share.

It is now an extremely dangerous time to get into areas like apparel, dining out and consumer electronics, since consumer confidence is headed down. A fall in home prices will hit consumers further.

I have sold most of my restaurant stocks after a decent runup. I am still holding onto my specialty apparel retailer stocks, most of which have gained considerably in the last few months. I am assuming that these will be the least hit during a slowdown and a consolidation will work in their favor. These include
  • Charming Shoppes (CHRS), a plus-size women's retailer, a growing! business
  • United Retail Group (URGI): another plus-size women's retailer
  • Casual Male Retail Group (CMRG): a plus-size men's retailer
  • Mothers Work (MWRK): maternity apparel manufacturer / retailer
  • Gymboree (GYMB): a children's retailer whose turnaround is proceeding well
  • Limited Brands (LTD): owns Victoria's Secret - need I say more. This is also an interesting play on demand for their wares in Japan, China, where it already owns stores and eventually in India too. Pays a healthy dividend and recently made a good one-time payout. Still sits on a lot of cash. This will be the last one to be effected in a consumer spending slowdown!

I have also been watching a few others, waiting patiently for a good entry point. These include
  • Gap (GPS): At a cheap-enough price, this will find a lot of buyers, including possibly private-equity groups.
  • Children's Place (PLCE): extremely expensive right now.
  • Maidenform (MFB): makers of women's intimate apparel. Recently went public after a bad spell that included bankruptcy! The original creators of the modern bra, this company has a long history peppered with classic adlines like I dreamed I stopped traffic with my Maidenform bra. Enough titillation for one post!
  • Kellwood (KWD): may sell part of the company instead of the whole.
  • Ashworth (ASHW): Will definitely sell out, but I am waiting for some insider buying to show up. Concentrates on sportswear, with golf as the focus.
  • Hot Topic (HOTT): definitely worth buying now, after the recent pullback. Teenage retailer, but unlike others (Aeropostale, American Eagle, ANF) who I would not touch with a bargepole, these guys have a focus on punk and gothic items and hence have a corner of the market all to themselves.
  • Perry Ellis (PERY): sportswear and casual wear retailer. Fairly priced.
  • Dressbarn (DBRN), Haggar (HGGR) and Guess (GES): Haggar announced that it is looking for a buyer and the stock has had a runup since then. The other two look attractive, but I am waiting for some insider buying to show up.
  • Zumiez (ZUMZ): Recently had a very successful IPO. Mostly action-sports related apparel to be found here. One of the few stores in the malls that still attract large crowds. Could be worth buying even at current prices, but I will wait.


Post a Comment

<< Home