Buckingham Capital Loads Up On Its Top Consumer Stock Picks

David Keidan-led Buckingham Capital Management recently submitted its 13F filing with the SEC for the reporting period of June 30, revealing a U.S. equity portfolio with holdings valued at $823.4 million. The New York-based fund was founded in 1985 and currently manages over $1.2 billion in assets spread over two strategies: a broad one that covers most sectors and one focused strictly on stocks from the retail, apparel, and footwear spaces.

According to Buckingham’s latest filing, its U.S. equity portfolio was well diversified at the end of June, with 79 long positions and its top-ten holdings accounting for less than one-third of the value of the portfolio. However, the fund had very high exposure to the consumer discretionary sector, stocks from which amassed over two-thirds of its portfolio’s value. Considering the fund’s high exposure to the sector, in this article we’ll focus on its top-five holdings going into the third quarter, all of which belonged to stocks from the consumer discretionary space.

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#5. Burlington Stores Inc (NYSE:BURL)

– Shares Owned by Buckingham Capital Management (as of June 30): 374,100

– Value of Holding (as of June  30): $24.96 Million

Burlington Stores Inc (NYSE:BURL) has been one of the best performing retailing stocks this year, having appreciated by almost 80%. During the second quarter, Buckingham Capital inched up its stake in the company by 2%. Since the company has been posting strong comps and financial numbers over the past several quarters, most analysts have a favorable view of it. However, a lot of analysts also think that due to the hefty rally it has seen this year, the stock might have become overvalued. For its second quarter results, which will be announced on August 25, analysts are expecting the company to report EPS of $0.30 on revenue of $1.24 billion. For the same quarter of the previous year, Burlington Stores Inc (NYSE:BURL) delivered EPS of $0.19 on revenue of $1.14 billion. On August 1, analysts at Goldman Sachs reiterated their ‘Buy’ rating and $84 price target on the stock. John Horseman‘s Horseman Capital Management also upped its holding in Burlington Stores during the second quarter, by 23% to 430,000 shares.

#4. Signet Jewelers Ltd. (NYSE:SIG)

– Shares Owned by Buckingham Capital Management (as of June 30): 305,687

– Value of Holding (as of June  30): $25.17 Million

Despite Buckingham Capital increasing its stake in Signet Jewelers Ltd. (NYSE:SIG) by 28% during the second quarter, the holding dropped from the top spot in the fund’s portfolio to the fourth spot owing to the sharp 33.5% drop in Signet’s stock during the quarter. A large part of the 23% decline that Signet Jewelers Ltd. (NYSE:SIG)’s stock has seen this year came after reports emerged alleging that the company was engaged in diamond-swapping practices. Though the company has tried numerous damage control measures over the past two months, including promotions and insiders buying the stock, its shares have failed to bounce back convincingly. Signet Jewelers Ltd. (NYSE:SIG) is also expected to report its second quarter results by the end of this month and the current consensus of analysts is for it to report EPS of $1.46 on revenue of $1.44 billion. In comparison, the company had reported EPS of $1.28 on revenue of $1.41 billion for the same quarter of last year. Gabriel Plotkin‘s Melvin Capital Management lowered its stake in Signet Jewelers by 25% to 600,000 shares during the second quarter.

We’ll check out Foot Locker and two other consumer stocks that Buckingham Capital loves on the next page.

#3. Foot Locker, Inc. (NYSE:FL)

– Shares Owned by Buckingham Capital Management (as of June 30): 492,910

– Value of Holding (as of June  30): $27.04 Million

Like Signet Jewelers Ltd., Foot Locker, Inc. (NYSE:FL)’s stock also dropped significantly during the second quarter, by almost 15%. However, owing to Buckingham Capital increasing its stake in the company by 26% during the period, Foot Locker, Inc. (NYSE:FL) jumped two spots to become the fund’s third-most valuable equity holding as of the end of June. Several analysts who track Foot Locker think that the decline the stock has seen this year has made it a bargain, as it currently trades at a significant discount to its historical valuation. Though most analysts contend that the company can’t continue to grow organically at the same pace as it has in the past, they believe that it can still post better than expected financial results going forward and that the stock could sail pass the $70 level without much resistance if so. Shares currently trade at $61.18. On August 12, analysts at B. Riley upgraded the stock to ‘Buy’ from ‘Neutral’ while keeping their price target on it unchanged at $75. George Hall‘s Clinton Group also boosted its stake in the company during the second quarter, by 163% to 181,854 shares.

#2. PVH Corp (NYSE:PVH)

– Shares Owned by Buckingham Capital Management (as of June 30): 317,980

– Value of Holding (as of June  30): $29.96 Million

Moving on, Buckingham Capital upped its PVH Corp (NYSE:PVH) holding by 15% during the June quarter. PVH Corp’s stock lost almost 40% of its value during the final four months of 2015. However, it has recouped a large amount of those losses this year and is currently trading up by 43.14% year-to-date. In June, the company announced an offering of €350 million ($391.77 million) worth of senior notes due 2024. PVH Corp plans to use the proceeds from the offering for “general corporate purposes and to pay related transaction fees and expenses.” Barely a few days after that announcement, PVH Corp (NYSE:PVH) CEO Manny Chirico revealed at the Piper Jaffray Consumer Conference that sales at the company’s department stores were trending “slightly better” in Q2. The owner of the Tommy Hilfiger and Calvin Klein brands will announce its second quarter results on August 25. PVH Corp currently sports an average rating of ‘Overweight’ and an average price target of $107.18 from the 17 leading analysts on Wall Street who track it.

#1. G-III Apparel Group, Ltd. (NASDAQ:GIII)

– Shares Owned by Buckingham Capital Management (as of June 30): 763,624

– Value of Holding (as of June  30): $34.91 Million

Its G-III Apparel Group, Ltd. (NASDAQ:GIII) holding stands as one of the oldest in Buckingham Capital’s portfolio. During the second quarter the fund increased its stake in the company by 26%, elevating the holding to the top of its portfolio. Last month, the company revealed that it has agreed to acquire the Donna Karan brand from Louis Vuitton in a deal worth $650 million following which G-III Apparel Group’s stock slumped hard. Owing partially to that decline, the stock is currently trading down by 2.68% year-to-date. The current consensus on the Street is for G-III Apparel Group, Ltd. (NASDAQ:GIII) to report second quarter EPS of $0.18 on revenue of $484.85 million, compared to EPS of $0.27 on revenue of $474 million a year earlier. On July 26, analysts at Brean Capital reiterated their ‘Buy’ rating and $51 price target on the stock, which represents potential upside of 16%. Larry Foley and Paul Farrell’s Bronson Point Partners initiated a stake in the company during the second quarter, purchasing 176,500 shares.

Disclosure: None