Carter's Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of baby clothier Carter's (NYSE: CRI  ) are up more than 14% as of this writing thanks to a strategic investment from Boston private equity firm Berkshire Partners LLC.

So what: Berkshire disclosed in a Securities and Exchange Commission filing a series of investments that amount to a 13% stake in the company. In no other publicly traded position does Berkshire control even 10% of the shares outstanding, though its 9.4% stake in TransDigm Group (NYSE: TDG  ) comes close.

Now what: Fools tend to like Carter's, granting the stock a four-star rating in CAPS, while my colleagues at Motley Fool Hidden Gems like TransDigm. Is there enough commonality here to make Carter's a verifiable diamond in the rough? Berkshire seems to think so, but the stock isn't cheap trading for 17 times earnings. Tread carefully if you choose to invest.

Interested in more info on Carter's? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader.

Motley Fool newsletter services have recommended buying shares of TransDigm Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool's disclosure policy is at least 10% better than other disclosure policies.


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