Tiffany & Co. (TIF), Blue Nile Inc (NILE), Signet Jewelers Ltd. (SIG): Three Ways to Invest in a Girl’s Best Friend

Page 1 of 2

Jewelry is a timeliness gift and a completely discretionary expense. However, buying fancy baubles never seems to go out of style. Tiffany & Co. (NYSE:TIF), Blue Nile Inc (NASDAQ:NILE), and Signet Jewelers Ltd. (NYSE:SIG) each fill a different niche in the space.

Tiffany & Co. (NYSE:TIF)

Frivolous

Most people know full well that buying jewelry is an unnecessary expense. Sales are better in good times and worse when the economy cools off, but they never seem to stop.

Engagements, marriages, anniversaries, Valentine’s Day, or just because, there are any number of reasons to show someone that you love them with a ring, watch, or necklace. Although not exactly on a firm footing, the U.S. economy is starting to show some signs of strength. That could be good news for jewelry retailers.

The Little Blue Box

There’s something about that little blue box from Tiffany & Co. (NYSE:TIF) that sets a woman’s heart aflutter. While you may or may not understand it, there’s no denying that a Tiffany anything stands out from the rest of the crowd. And Tiffany works hard to make sure of that.

It positions itself at the very high-end of the jewelry market, even for its famous, and aspirational, silver jewelry. However, the company sells much more, including diamonds, watches, and eating utensils.

Tiffany & Co. (NYSE:TIF)Tiffany & Co. (NYSE:TIF)’s sales grew up to the 2007 to 2009 recession, fell for two years, and have since begun to grow again. Although earnings are a little variable because of the commodity nature of what it sells, the company hasn’t earned less than $1.45 a share over the last decade and posted earnings of $3.25 last year. It has a history of regular, though not annual, dividend increases.

The company has a global brand and reach, so more than just U.S. economic shifts need to be considered. However, a long history of success and an instantly recognized and respected brand set this company apart.

At the high end of the jewelry market, Tiffany & Co. (NYSE:TIF) shares are trading near all-time highs and have a price to earnings ratio in the low 20s. Growth investors would do well to consider this one, even if it only winds up on a watch list for a pullback.

Cheap-ish

Blue Nile Inc (NASDAQ:NILE) is at the opposite end of the jewelry spectrum. The company’s big focus is on diamonds, though it sells plenty of other trinkets. However, by using the Internet as its sales medium, the company has built a large business and managed to offer customers a good value proposition.

Like Tiffany & Co. (NYSE:TIF), Blue Nile Inc (NASDAQ:NILE)’s top-line fell during the recession, but has picked up since. Its sales, meanwhile, have grown from $130 million a decade ago to $400 million last year. That’s pretty impressive for an upstart jewelry store that doesn’t have any stores.

Part of its unique business model is that it doesn’t actually take ownership of diamonds until they have been paid for by a customer. That helps reduce costs and limits the impact of commodity price changes, though it doesn’t eliminate the issue.

While the top-line has been growing of late, the bottom-line has been a bit weak. Part of the problem is increasing Internet competition. Still, the company has a good brand name and is well respected. With no long-term debt, it has plenty of time to adjust to changing industry dynamics. There’s likely to be plenty of upside if the company can get earnings headed higher again. However, with a price to earnings ratio of 55, there’s also a risk that investors have already priced in that growth.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!