Why Tumi's Shares Boomed

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: Tumi Holdings (NYSE: TUMI  ) was up markedly today, reaching 23% gains early in the day before leveling off around 20% higher than yesterday's close thanks to a combination of strong forward guidance and subsequent analyst upgrades. The recently public upscale luggage maker reported its earnings last night, beating EPS expectations by $0.05 with an $0.18 EPS result. Tumi boosted full-year guidance by $0.03 on both high and low ends, from $0.64 to $0.67 in profit per share to $0.67 to $0.70.

So what: Analysts are clearly bullish on this company despite its premium valuation. Credit Suisse gave a very bullish recommendation after Tumi's earnings, saying that there may be less than 30% brand penetration and that Tumi could nearly double its market share from 7% to 13% over the next five years. That's no mean feat in a $4 billion global market, especially in a period of intense economic uncertainty.

Now what: Today's big pop reverses a summertime slide that had taken Tumi from a post-IPO closing range of more than $26 to less than $16. This news could be the catalyst for a sustained period of growth, but it would be small-f foolish to ignore the churning of the global economy. This is one stock to keep a close eye on, and a personal visit to one of Tumi's 1,800 outlets might offer more direct feedback for anyone still on the fence about this retailer.

Want more news and updates? Add Tumi to your watchlist now.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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