From Deseret News archives:
Tiffany & Co. is a stock that Buffett would love
Buffett likes companies with strong defenses, or "moats," around their businesses. Potential acquisitions must have a track record of generating superior returns on invested cash without taking on a lot of debt. And honest, level-headed leaders are a must because "Berkshire lets its businesses continue in the same successful manner with encouragement, not interference," as Buffett noted at Berkshire's annual shareholder meeting in May.
Buffett already knows a bit about bling: Berkshire Hathaway owns three jewelry businesses, the best-known of which is Borsheims, based in Omaha, Neb.. So adding Tiffany & Co. to Berkshire's roster is hardly a stretch.
Tiffany's branding power is virtually unassailable. The company has been building the brand since its founding in New York City in 1837 the same year Tiffany introduced the blue box. "When customers buy a diamond ring, they don't really know the stone's value, so it's important that they buy from a trusted provider," says Larry Coats, co-manager of Oak Value fund. "Tiffany is able to charge a premium price for a comparable product because of that."
At home, the company is balancing its highbrow image with more-affordable products. A new format of smaller "Tiffany Collections" stores will carry only merchandise that sells for $15,000 or less (regular Tiffany stores carry items that cost up to $1 million). The first store will open this October in Glendale, Calif.
Despite weakness in the retailing sector, Tiffany reported a 29-percent boost in earnings, to $2.33 per share, and an 11-percent rise in sales, to $2.9 billion, in the fiscal year that ended Jan. 31. At a recent price of $45, the stock (symbol TIF) trades for nearly 16 times the $2.88 per share that analysts, on average, estimate the company will earn in the current fiscal year.
Elizabeth Ody is a staff writer at Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com.
Comments
- BSA to host audiocast over Internet 5:47 p.m.
- Garbage trucks to trash teen drinking 5:47 p.m.
- Court seeks judicial candidates 5:29 p.m.
- Simple candies for the holidays 5:15 p.m.
- Latkes from frozen hash browns 5:14 p.m.
- Cakes taking a starring role 5:14 p.m.
- KSL is No. 1 5:14 p.m.
- Late local news ratings 5:14 p.m.
- Black Bean and Shrimp Salad perfect 5:14 p.m.
- Nonni's offers soft version of biscotti 5:14 p.m.
- 2 citations issued at Y.-U. game
- BYU says Hall incident resolved
- Max Hall: a fixture in rivalry lore
- 'Grandfamilies' a growing trend
- Mitchell called intelligent, controlling
- Witness: Mitchell wanted attention
- MWC '09 season in review
- Hall reprimanded by MWC
- Jazz win 6th in 7 games
- Daughter: Mitchell fed me my pet
- Hall mouths off about hate of Utah
901 - Cougars beat Utes in overtime
482 - Hall reprimanded by MWC
400 - Max Hall issues apology
387 - Hall's pain reflects self-betrayal
342 - Utes won't respond to Hall
272 - BYU says Hall incident resolved
221 - 2 citations issued at Y.-U. game
150 - BYU is champion of the state
142 - Cave to be sealed with body inside
123
I've gone to quite a few BYU-U games over the years.The HORRIBLE behavior I...
...
One last word on the Hall thing. Everyone one in the west knows that Utah...
LDS Ute Fan: THROWING BEER!!!!!!!!!!!!!!
hmm how many national championships has Boise won? How many league...
Crazy by choice. One hangup I have with scripture is the "need" to maintain...
Local TV news is going the same way as newspapers. The web and various other...
Debbie was married to Mitchell from 1980-1985 according to the Sep. 1, 2004...
To all the BYU fans that talk about how nice the Oklahoma fans were to you....
Airlines, aiports, stadiums, movie theaters all make their money from patrons...


You can be the first to comment on this story.