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2-Star Stocks Poised to Plunge: Tiffany

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 6:54PM

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Market-lagging returns could be written in these two stars.

Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, luxury jewelry retailer Tiffany (NYSE:TIF) has received the distressing two-star ranking. While one-star stocks have been the worst performers, our data has shown that two-star stocks still lag the market by a significant margin and should be approached with caution; conversely, highly rated stocks have outperformed the S&P.

With that in mind, let's take a closer look at Tiffany's business, and see what CAPS investors are saying about the stock right now.

Tiffany facts

Headquarters (founded)

New York, N.Y. (1837)

Market Cap

$2.77 billion

Industry

Jewelry Stores

TTM Revenue

$3.07 billion

Management

CEO Michael Kowalski (since 1999)

CFO James Fernandez (since 1989)

Net Income Growth (5-year compound annual and TTM)

8.8% and (11.9%)

Competitors

Blue Nile (NASDAQ:NILE),

Zale (NYSE:ZLC)

CAPS members bearish on TIF also bearish on:

Starbucks (NASDAQ:SBUX),

Citigroup (NYSE:C)

CAPS members bullish on TIF also bullish on:

Google (NASDAQ:GOOG),

Microsoft (NASDAQ:MSFT)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 30% of the 137 All-Star members who have rated Tiffany believe the stock will underperform the S&P 500 going forward. These bears include jstegma and Option1307, both of whom are ranked in the top 20% of our community.

Earlier this month, jstegma warned our community that while "the truly rich will still buy things from Tiffany's, their customer base is likely to shrink. The middle-class squeeze that will result from the recession is going to be murder on high-end stores like this ... "

In a pitch from the very next day, Option1307 follows that bearish line of thinking, writing

The holiday shopping season is going to be non-existent. People are not spending money this year even if they have it. While many argue that Tiffany's is high end and will be resistant. I disagree. Tiffany caters to middle class significantly as well, and this is where they will be hurt the most. the rich will continue buying expensive things. However, many middle class people were stretching to make purchases at Tiffany's in order to feel "cool". They will [no] longer be able to make this stretch. I think people underestimate the amount of sales Tiffany's does in the $100-250 range.

What do you think about Tiffany, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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By posting on CAPS, you can help our Foolanthropy efforts to promote financial literacy. The Fool's "My 2 Cents" campaign will donate $0.02 for each message posted on any of our discussion boards, as well as for each CAPS pitch, during the month of December. 

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Starbucks and Microsoft are Motley Fool Inside Value selections. Blue Nile and Google are Motley Fool Rule Breakers recommendations. Starbucks is a Motley Fool Stock Advisor selection. The Fool owns shares of Starbucks. The Fool's disclosure policy always gets a perfect score.

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Stocks Mentioned

Tiffany & Co. Stock Quote
Tiffany & Co.
TIF
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$291.91 (1.70%) $4.89
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$121.68 (2.39%) $2.84
Starbucks Corporation Stock Quote
Starbucks Corporation
SBUX
$88.31 (1.19%) $1.04
Citigroup Inc. Stock Quote
Citigroup Inc.
C
$54.38 (0.70%) $0.38
Blue Nile, Inc. Stock Quote
Blue Nile, Inc.
NILE

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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