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#1
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Stock Of The Day 6/25 LTD - Limited Brands
I'll start on a simple premise. How many chicks do you know who shop at Victoria's Secret?
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#2
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Re: Stock Of The Day 6/25 LTD - Limited Brands
As much as I like the idea of telling girls that I'm a part owner of Victoria's Secret... I don't really like this pick. The biggest thing that peaks my interest is the relatively high level of insider ownership at 13% and especially the insider buying taking place in May.
Then I look at their balance sheet and see a lot of long-term debt along with very mediocre earnings growth, margins, and returns on equity relative to the rest of the industry. I think there are other companies within this industry that have better prospects. |
#3
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Re: Stock Of The Day 6/25 LTD - Limited Brands
I see a company that owns too many brands, some of which have to be muddying up that balance sheet. They have a CEO who's willing to let go, as he did with Abercrombie. I like the company because it is so unexciting. They're still making money, they are IMO a little undervalued because they haven't done anything lately, they are proven winners in the retail game, and I think they'll come up with something sooner or later.
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#4
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Re: Stock Of The Day 6/25 LTD - Limited Brands
James, how do their inventory ratios look?
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#5
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Re: Stock Of The Day 6/25 LTD - Limited Brands
Don't know.
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#6
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Re: Stock Of The Day 6/25 LTD - Limited Brands
For what it's worth, their inventory ratios look better than ever. Using the info from Yahoo Finance...
Jan-05 Quarter end Inventory Turoverover = Cost of Goods Sold / Average Inventory = 1.78 Inventory Period = 365 / Invetnory Turnover = 205 Oct-04 Quarter 0.82 446 Jul-04 Quarter 1.26 290 May-04 Quarter 1.30 281 |
#7
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Re: Stock Of The Day 6/25 LTD - Limited Brands
Are you sure those numbers are right? If you're figuring quarterly turnover, why use a full year as your inventory period? I would think 91 would be the period, but I honestly don't know.
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#8
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Re: Stock Of The Day 6/25 LTD - Limited Brands
They don't look all that great to me. FCFY of about 1.5% in 05, 10% in 04, and (7.9%) in 03. Fairly low EPM as well.
Anybody have any comps handy for the industry? |
#9
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Re: Stock Of The Day 6/25 LTD - Limited Brands
The good - they are trading at about 15 P/E and are paying out a 2.82% annual dividend yield at its current price.
Thats about it though. They aren't really expanding and their same store sales are pretty stagnant. And their first quarter this year pretty much sucked. I would keep an eye on it only from a value investing perspective. If they fell to $19 or so because of some weak overall retail/apparel data or have another poor quarter or two, it would be worth buying. |
#10
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Re: Stock Of The Day 6/25 LTD - Limited Brands
[ QUOTE ]
I would keep an eye on it only from a value investing perspective. If they fell to $19 or so because of some weak overall retail/apparel data or have another poor quarter or two, it would be worth buying. [/ QUOTE ] That's where I see the money, and as I pointed out earlier, I doubt all their stores are performing on par with the company. I have no information on the performance of each different brand, but my guess is some are leagues away from the rest e.g. Victoria's Secret. Over time, I wouldn't be shocked to see them spin off the laggards as they did with Abercrombie. I think it's at a decent price, but no doubt at $19 it would be a great 10+ year investment. |
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