Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member. Inc (PCLN) & More: A Trio of Picks from GAMCO’s Howard Ward

Howard Ward runs GAMCO’s growth portfolio, and is charge of billions of dollars of investment capital. He appeared on Bloomberg Wednesday to give a few of his picks. Ward likes Tiffany & Co. (NYSE:TIF) Inc (NASDAQ:PCLN) and Deere & Company (NYSE:DE). I’ll outline his reasoning, and offer a few counter-arguments. Inc (NASDAQ:PCLN)

Tiffany is a potential takeover target

Ward identified Tiffany as a potential takeover target. Specifically, he believes that the company could attract interest from a big, European fashion conglomerate like LVMH.

The company also has extensive exposure to the Japanese market. Although the Japanese economy has been sluggish over the last 20 years, the Bank of Japan has pledged to undertake aggressive new policy actions.

The Japanese stock market has rallied tremendously since December, as the yen has weakened. That could fuel a wealth effect, giving affluent Japanese more reason to buy Tiffany products.

On a trading basis, Tiffany & Co. (NYSE:TIF) has been an underperformer in recent quarters, and could be due for a resurgence.7jy32

However, despite the fact that Tiffany & Co. (NYSE:TIF) has lagged the S&P 500 over the last year, shares have actually had a solid bounce since last July, and are up about 37% in the last nine months. Shares trade at a price-to-earnings ratio of 22, higher than the overall market.

And while that Japanese exposure could be a positive catalyst, it could also have brutal consequences. Some money managers, like Kyle Bass, are predicting a full-scale economic collapse in Japan. has excellent management Inc (NASDAQ:PCLN) has been a high flying stock over the last few years, but Ward continues to like it. He praised the company’s ability to grow in Europe, despite the continent’s continued economic weakness. Inc (NASDAQ:PCLN) has exposure to Asia through its subsidiary Agoda, and Ward believes Agoda should be a source of growth in future months. He’s also a big fan of the company’s management team.

The problem with Inc (NASDAQ:PCLN) stock is that it seems to trade heavily on momentum. It’s certainly worthy of being considered a growth stock, but can the company really continue to post growth rates in the high teens?

Over the last year, shares are roughly flat. But over the last four years, shares are up well over 600%.

Analysts have expressed skepticism about Inc (NASDAQ:PCLN)’s future growth. Analysts at Morgan Stanley, for example, downgraded Inc (NASDAQ:PCLN) shares back in January, noting that it would become more expensive for the company to acquire customers going forward.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.