A: Its little blue box has contained good earnings results lately.
- Andrew Leckey
Jan. 13: Mattel's offerings are playing well in overseas markets
Jan. 6: Sun Microsystems remains a work in progress
IN THIS PACKAGE
- Advice on investing $10,000 in 2007
- Regulators urge government to beef up 401(k) oversight
- Charitable donations cut taxes, spread cheer
- It's not just about double-digit returns
- For many investors, tweaks may be wise
- The savings game
- The Leckey file
- Getting started
- Spending smart
- Taking stock
- Assess your risk tolerance
- The week ahead
- Earnings Forecasts
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Strong U.S. results, particularly all those big-ticket purchases, have compensated for weak results in Japan. It recently reported fiscal third-quarter profits were up 23 percent, and the firm increased its full-year outlook.
A new line of designer jewelry by architect Frank Gehry and its renovated flagship store on New York's Fifth Avenue have both made solid contributions. Besides jewelry, Tiffany sells china, fashion accessories, watches, fragrances and gift items.
There has been industrywide concern about the impact on holiday diamond sales of the Warner Bros. film "Blood Diamond" starring Leonardo DiCaprio, which depicts violent results of uncontrolled diamond trading.
But most analysts expect any financial effect to be short-lived. Responding to the film's release, Tiffany asserted that it tries to assure the responsible mining of all materials used to make its jewelry.
Shares of Tiffany (TIF) are up 1 percent this year following a gain of 20 percent last year and decline of 29 percent in 2004. The company, which has little debt and significant cash, has repurchased shares.
Its luxury market is primarily influenced by the mind-set of high-income consumers. To meet rising demand from this segment, Tiffany has doubled the number of stores and boutiques it operates in the U.S. and abroad to 164 in the past decade.
Half of its international business comes from the mature market of Japan, but it has growth opportunities in China, other Southeast Asian countries, Australia and Europe.
To raise its brand awareness Tiffany signed a 10-year license with Italy's Luxottica Group to develop the jeweler's first sunglasses and prescription eyewear line. They'll be sold not only in Tiffany stores but also by other chains. Luxottica already makes glasses for Chanel, Bulgari and Polo Ralph Lauren.
Consensus rating on Tiffany shares is a "hold," according to Thomson Financial. That consists of one "strong buy," four "buys," eight "holds" and one "strong sell."
Earnings are expected to increase 3 percent this year versus 10 percent forecast for the jewelry store industry. Next year's predicted 14 percent increase is in line with the forecast for its peers. The expected three-year annualized growth rate of 12 percent compares to 14 percent predicted industrywide.
Q: I am considering investing in one of the American Funds. What do you think of American Funds Investment Company of America? -- L.R., via the Internet
A: Its lineup of portfolio managers reads like the shingle of a large law firm.
Nine different managers, their tenures at the fund ranging from 19 years to less than a year, each handle separate portfolios. Adding to this strength in numbers is American's team of more than 140 investment researchers worldwide.
The $89 billion American Funds Investment Company of America "A" (AIVSX) has had a total return of 15 percent over the past 12 months to rank below the midpoint of all large value funds. Its three-year annualized return of 12 percent puts it in the lowest one-third of its peers.
"I do recommend it because it is a pretty good fund, has low expenses and American has better research backing than just about anywhere else," said Paul Herbert, an analyst with Morningstar Inc. in Chicago. "It has been a bit iffy lately, however, since the bigger-name stocks it emphasizes haven't done as well as smaller names."
The fund favors blue-chip stocks, many of which pay dividends, but is also willing to buy depressed growth stocks. The managers place a significant portion of assets in bonds and cash at various times.