Stock Pick – Tiffany And Co

TIFFANY AND CO

On Monday Tiffany & Co posted higher than expected quarterly result. The company has reported increased sales overseas and at the same the newly opened stores has helped to counterbalance the effects of a slowing US economy as that has put a strain on consumer spending.

The company reported that its net sales increased 15% in the fiscal year ended January 31, 2008 and rose 10% in the fourth quarter. Net earnings per diluted share from continuing operations excluding non-recurring items increased 22% to $2.33 in the year and increased 19% to $1.27 in the fourth quarter.

The company’s net sales in the fiscal year increased 15% to $2,938,771,000. On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, net sales increased 13% and worldwide comparable store sales increased 7%.

The company’s sales rose 10% to $1.05 billion. The company is expecting, for the current year, the net earnings per share to rise by 11% to 15% to a range of $2.75 to $2.85.

The Company repurchased and retired 9,299,491 shares of its Common Stock in the fourth quarter at a total cost of $418,374,000, or an average cost of $44.99 per share. In the year, the Company spent $574,608,000 to repurchase 12,374,000 shares of its Common Stock at an average cost of $46.44 per share. In January 2008, the Board of Directors increased by $500 million the amount authorized for future repurchases through January 2011. At January 31, 2008, the Company had $621 million available for future repurchases.

About Tiffany And Co

Tiffany & Co. is a holding company that operates through its subsidiary companies. The Company's principal subsidiary, Tiffany and Company, is a jeweler and specialty retailer, whose merchandise offerings include an extensive selection of jewelry (83% of net sales in fiscal 2006), as well as timepieces, sterling silverware, china, crystal, stationery, fragrances and accessories.

Through Tiffany and Company and other subsidiaries, the Company is engaged in product design, manufacturing and retailing activities.

Company’s performance on stock market

After touching the January’s low, this stock had performed quite well on Wall Street. At current situation, after the quarterly result, it is expected the stock will resume its upward movement.

Technically the stock seems to have resistant at $45. Once the stock takes out $45 resistant successfully with huge volume, the immediate target seems at $50 and from mid to long term, the stock has potential to touch $60.

From long term investor’s point of view, I think systemic small-small accumulation of Tiffany stock will be a very good strategy at current market scenario. Even though the Wall Street has gained quite considerably after the two month’s turmoil, it certainly cannot be granted that Wall Street is now completely out of woods. There is lot of uncertainties out there, and any slight negative news from economy front can drag the market southward.

If the Dow Jones and NASDAQ tends to move southward then this stock will also follow their same direction, but at lower level of $35, this stock will be a very good buy with huge upward potential and very low downside risk.

Mid Term Target: $50
Long Term Target: $60

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