Finally, it’s a factor of price point. Tumi’s travel products fit right into a perfect niche with consumers of being a brand-name product, but not carrying a brand-name price tag. This bodes well as the business professional tends to be a steady client of Tumi’s, and globally they appear to be one of the few groups of individuals still spending. I would suggest taking Tumi’s quarterly miss as an opportunity to jump aboard a well-recognized brand-name that I feel has double-digit growth potential on an annual basis throughout the remainder of the decade.
Nationstar Mortgage Holdings Inc (NYSE:NSM)
Don’t worry, short-sellers, I haven’t forgotten about you! Nationstar Mortgage Holdings Inc (NYSE:NSM), a residential mortgage loan servicer has been literally raking in profits since the housing market bottomed three years ago. Record-low interest rates have allowed consumers to refinance their existing mortgages and purchase new homes at very favorable rates, helping to pump up Nationstar Mortgage Holdings Inc (NYSE:NSM)’s loan origination fees.
In Nationstar Mortgage Holdings Inc (NYSE:NSM)’s second-quarter results, reported about five weeks ago, the company delivered a 40% increase in revenue and a 37% jump in adjusted-EBITDA. Furthermore, it reaffirmed its previous EPS forecast for next year of $6.45-$7.50, placing the stock at a forward P/E of just eight at the midpoint. Despite these results, I see serious signs of worry on the horizon.
Mortgage originations since May have fallen in all but two weeks as interest rates have soared about 100 basis points from their lows. Although rates are still historically lower than they’ve just about ever been, consumers have been spoiled for years by ever-declining rates. With that trend possibly broken, and the Federal Reserve signaling an end to its stimulus program sometimes in the very near future, it seems likely that rates will continue to edge up slowly and squeeze the bullishness out of Nationstar Mortgage Holdings Inc (NYSE:NSM)’s originations’ business.
It’s quite possible Nationstar Mortgage Holdings Inc (NYSE:NSM) could have one more earnings surprise built in for this upcoming quarter, but after that I’d be looking for short-sellers to take charge.
The article 3 Stocks to Get on Your Watchlist originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.‘ The Motley Fool has no position in any of the stocks mentioned.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
