3 Stocks You Can Love on Valentine's Day

There's no question diligent investors should be careful not to become too attached to their stocks. After all, knowing when to sell is just as important as being able to identify great stocks in the first place.

However, that doesn't mean investors shouldn't maintain a hearty appreciation for the businesses behind the stocks they own. With this in mind, and with Valentine's Day upon us, here are three solid stocks with which any long-term investor can safely fall in love.

Cooking up profits
First up, consider Olive Garden and LongHorn Steakhouse operator Darden Restaurants (NYSE: DRI  ) . After all, however much you like to cook at home, Valentine's Day remains one of the busiest days of the year for many restaurants, and any one of Darden's eight brands will be happy to take your reservation.  

On one hand, the company is going through a rough patch along with the entire restaurant industry as cash-strapped consumers increasingly opt for more affordable, fast-casual options like Chipotle Mexican Grill. On the other hand, and as a result, Darden is currently trading near 52-week lows at just 13.57 times trailing earnings. In addition, it's solidly profitable and boasts a 4.2% dividend yield, so investors can be paid for their patience as they wait for the economy to rebound. When that happens, it's a safe bet to expect Darden's shares will follow suit.

Diamonds, sweets, and railroads
Next up, lovelorn investors might be able to to find happiness in owning shares of Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  )

Exactly what, you ask, does Warren Buffett's massive financial holding company have to do with Valentine's Day? In addition to owning Geico Auto Insurance and Burlington Northern Santa Fe, Berkshire is also responsible for operating multiple jewelry subsidiaries including Borsheim's, Ben Bridge Jewelers, and Helzberg Diamonds. What's more, for consumers with a sweet tooth, Berkshire also runs Dairy Queen and See's Candies; if that's not a perfect play on Valentine's Day, I don't know what is.

With a book value of $78.55 per Class B share, Berkshire is currently trading at just a slight premium to the 1.2 times at which Buffett himself stated he would be comfortable buying shares.  Even so, any investor would be hard pressed to find a more diversified company capable of creating such substantial long-term value for shareholders.

Luxury shoes and handbags
On the other side of the gift spectrum, luxury handbag maker Coach (NYSE: COH  ) has been busy trying to prove diamonds aren't a girl's best friend.  

Fortunately for investors waiting on the sidelines, Coach is still reeling after badly missing earnings estimates last month for the first time in 11 quarters. To be sure, the stock dropped 16% in the day following the announcement during which shareholders not only learned its core North American market dropped 2%, but also that the company will pursue a potentially ill-advised foray into the already crowded footwear market. However, with $859 million in cash and equivalents and almost no debt, Coach seems bent on rewarding shareholders who stick around through share repurchases and a 2.5% dividend which has quadrupled since 2009.  

In addition, while Coach increased overall revenue by a meager 4% in the most recent quarter, its sales in China skyrocketed 40% from the year-ago period, signaling significant strength in the nation that holds nearly one-fifth of the world's population.  Even still, Coach has plenty of room to expand in the country and expects to grow its locations' total square footage by 35% when all's said and done by the end of fiscal 2013. 

Finally, Coach has shown its products aren't just for the ladies anymore. Despite stagnant growth in its core Women's category, its Men's business remains on track to grow around 50% globally in fiscal 2013 and should account for more than $600 million in revenue by the end of the year.   

In the end, with shares of Coach trading at only 13.5 times trailing earnings and nearly 40% below their 52-week high, this looks like a long-term bargain that's too good to pass up.

Foolish bottom line
Whether you love or loathe Valentine's Day, the fact remains that it means big business around the world for all three of the aforementioned companies. Take your pick or take all three, but I'm convinced Darden, Berkshire, and Coach all represent fantastic businesses whose stocks will undoubtedly beat the market going forward.

Warren Buffett's long track record of success has made him one of the best investors of all time. With Buffett at the helm, Berkshire Hathaway has grown book value per share at a compounded annual rate of 19.8% for nearly 50 years! Despite an incredible historical track record, investors have to understand the key issues to watch moving forward. To help investors, The Fool's resident Berkshire Hathaway expert, Joe Magyer, has created this premium research report on the company. Inside you'll receive ongoing updates as key news hits, as well as reasons to both buy and sell the stock. Claim a copy by clicking here now.


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  • Report this Comment On February 14, 2013, at 1:59 PM, mattryan wrote:

    I agree with you on Coach this is a bargin price. COH will be my newest pick in CAPs and in real life.

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