With Holiday season kicking in, my partners and I decided to diversify our holdings. It was pretty evident that a colder time period (fall/winter) will drive coffee sales up. Though the idea started off with a simple hot chocolate at Caribou Coffee, I bought Caribou/Starbucks stock almost immediately after. The idea turned out to be a good one. Caribou Coffee has been going nowhere but up, and we sold Starbucks after making a slight profit. We are now looking to diversify to sub sectors for the Holiday sales. I personally, am looking into investing into big retailers that generally have a big impact on sales and have a positive outlook for the 2010 winter.
One stock we have had trouble with was VF Corporation, or as we nicknamed it 'The North Face Stock'. It had been in a downward spiral since we bought, assuming it would go up as the cold approached.
Do you have any ideas for stocks that will generally do better in the winter? It could be coffee, winter clothing, toy manufacturer/sellers, etc.
Oh Sagaar, nobody buys North Face clothing to stay warm. It's all about the fashion when it comes to VF brands. Frankly I think it is a bit late to invest in winter apparel, because a majority of the people I know buy their winter clothes before winter. I haven't seen too many people rush into a department store in the dead of winter looking for a winter jacket. My low-researched prediction is that if anything, apparel stores will feel a stock boost until mid-November before they steady out or possibly crash. Putting my mind as the shopper, I don't think we can hope for generous retail stock boosts throughout winter.
ReplyDeleteAlso, during the holiday seasons people tend to give gifts. So companies than manufacture items that are potential gifts may also see a rise in their stocks. I know that Apple is obviously a company on most people's radar, so do do you think that their products such as computers, Ipods, or Iphones will do well in the upcoming holiday season?
ReplyDeleteI agree with Warren that North Face might be about the fashion. However, that does not mean it doesn't sell well in the winter season (November through February). In fact, Q1 [ending January 2010] revenues and profits are very close to Q4 (which is the higest; Q1 is much closer than Q2 or Q3). Plus, during this time more people shop for holiday gifts (especially in November and December). With the poor weather and less daylight, people are also more compelled to be doing activities indoors, such as shopping.
ReplyDeleteRegarding the comment that VF is all about fashion, that is not completely true. They do release North Face, Vans, and Nautica; these might be seen as more expensive products. But, that is not all. VF also owns Wrangler Jeans, Lee Jeans (both of which can be readily accesible to the common consumer through places like Walmart), Eastpak (backpacks), and JanSport
(backpacks worn by many students).
Sources:
http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=VFC
http://www.google.com/finance?q=NYSE:VFC&fstype=ii
http://finance.yahoo.com/q/is?s=VFC
Regarding V.F. Corporation (VFC), check out their most recent 10Q. Copy and paste the following link:
ReplyDeletehttp://phx.corporate-ir.net/phoenix.zhtml?c=61559&p=irol-sec&control_selectgroup=Quarterly%20Filings
This link came from the Investor Relations page under SEC Filings.
The share price of VFC may be suffering, however, do look at the "Highlights of the Third Quarter of 2010" - page 19 of the PDF. Being mindful of this kind of information is worthwhile. VFC actually reported solid margins and an increase in revenues for a majority of their business segments. Furthermore, in a report released on October 21, the company said they would increase their dividend. This would mark their 38th consecutive year of increasing dividend payments to shareholders. That is a sign of financial strength.
Please note, I did not read through the entire 10Q or do an analysis on the apparel industry, so there may also be reasons that justify the negative share price movement. In these 10Qs, there is A LOT of information. If there are any questions, please ask. This is where your analysis comes into play!