Timberland Joins a New Ecosystem

This article is part of our Rising Star Portfolio series.

Buyouts can sometimes be bittersweet. Just take today's big news about Timberland (NYSE: TBL  ) , my first purchase for my Rising Stars portfolio in November.

VF (NYSE: VFC  ) has offered to buy the boot maker for about $2 billion in cash. Apparently, VF agrees that this socially responsible company holds exceptional growth potential, since it's offering a premium price of $43 per share. Both companies' boards have given the thumbs-up on this deal.

On June 1, Dayana Yochim and I discussed Timberland's bright future for our "Stock Picks With Chicks" series, arguing that investor negativity and stock-price weakness after a "disappointing quarter" were overblown. When it came to growth, we felt Timberland was good to go. Apparently, VF agreed.

Incidentally, Timberland's not the only groovy brand that VF has snapped up over the years. It owns a plethora of well-known brands like The North Face, Vans, and 7 for All Mankind, among others.

Word of Timberland's buyout has increased investor interest in related stocks like Crocs (Nasdaq: CROX  ) , Deckers (Nasdaq: DECK  ) , and Finish Line (Nasdaq: FINL  ) because of the possibility of a buyout. Rather than simply buying stocks they believe could get snapped up by rivals, savvy investors should tread carefully among footwear companies, seeking strong companies that trade at fair value or less.

Last month's announcement that France's PPR planned to buy Volcom (Nasdaq: VLCM  ) recalled similarly poignant sentiments about buyouts (and sellouts). When an earnest, authentic, well-run company gets purchased by a bigger one, those who invested in the acquired company might always wonder what could have been.

Still, premium prices and excellent returns take the sting out of such moments. Thanks to the deal, Timberland now represents a double in my Rising Stars portfolio. My original plan was to hold onto Timberland for the very long term, but this positive outcome in the short run leaves little room for complaints. 

This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. See all of our Rising Star analysts (and their portfolios).

The Motley Fool owns shares of Timberland. Motley Fool newsletter services have recommended buying shares of Volcom and Timberland. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned in her personal portfolio. For more on this and other topics, check back at Fool.com, or follow her on Twitter: @AlyceLomax. 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 has a disclosure policy.


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