In just a few weeks Q3 2016 will come to a close for most corporations. As Q4 2016 rapidly approaches, U.S. retailers will enter the busiest shopping period of the year-commonly referred to as the “Holiday Shopping Season”. Historically, at each years end most investors generally tighten the latch on investment portfolios and navigate into securities offering less risk and more stability. I suggest we explore two companies that may attract conservative investors because of minimal volatility, respected products and highly visible branding. Here, I introduce Starbucks (SBUX) and VF Corporation (VFC). Throughout U.S. shopping malls this holiday season many patrons reflection of style and taste will incorporate notable products and/or brands sold by the aforementioned companies. As we shop over the next two months survey shoppers and take notice of coffee, Frappuccino’s, hot-chocolate, lattes, North Face overcoats and Timberland footwear being consumed and worn by patrons.
At a glance, I like Starbucks (SBUX), a Seattle, WA based company founded in 1971 and the leading producer of specialty coffee in the world. The chain sells coffee drinks, whole beans, and coffee related products throughout its approximately 21,000 stores. Also, it has been widely identified as a status brand for many premium coffee consumers. However, Starbucks brings more to the table than just premium coffee products. So, I took a more in-depth look at what’s emerging over the horizon related to new product offerings, partnerships or acquisitions that may occur in Q4 2016 or Q1 2017. A first sign of potential growth was an announcement to sell apparel in their high-end Starbucks Roastery and Reserve Tasting Room, at the Seattle store location. The clothing and footwear will be provided by ECOALF, a sustainable brand of clothing made from recyclable items such a PET plastic bottles, fishing nets, post-industrial cottons and high-end yarns. How cool is this? I see growth and a forward-thinking strategy! Next, was the announcement of a joint-partnership agreement between Starbucks and Teavana Iced Teas. This partnership introduced 10 hot brewed teas and 3 tea lattes to be sold in more than 6,200 stores throughout China and Asia Pacific across 16 markets. Currently, the stock is trading at $53.17 with an annual dividend yield of 1.50% and $1.79 earnings per share. Let’s invest. I suggest this to be a solid investment.
Moreover, we suggest VF Corporation (VFC) as a solid stock purchase for conservative investors looking for stability, income and growth in Q4 2016 or Q1 2017. An apparel company based in Greensboro, NC founded in 1879 by John Barbey. The company distributes the following well-known brands: The North Face, Timberland, Vans, Lee Jeans, Wrangler, Nautica, and Majestic. During Q3 2016 the company announced a deal to sell their Contemporary Brands business to Delta Gail Industries. The brands included in the sale were 7 for All Mankind, Splendid, and Ella Moss. Looking ahead this will allow VF Corporation to focus more on their cornerstone brands and make additional investments to market these brands internationally, mostly in China. According to the company’s website they currently maintain a presence in more than 170 Chinese cities and this number is expected to increase but a specific number has not been stated. Aidan O’Meara, President of VF Corporation Asian Pacific division states, “Asia Pacific is an important region for business development and remains a priority focus for the company.” He adds, “Our plan is to continue to focus on locally relevant innovation, further invest in demand creation and leverage our scale and capabilities as ‘One VF’ to fully capitalize on the growth opportunities and take market share.” In 2015 currency neutral revenue in the region were up 10 percent reaching $1.2billion. Currently, the stock is trading at $55.00 per share with an annual dividend yield of 2.60% and $2.88 earnings per share. Let’s invest. I suggest this to be a solid investment due to potential dividend increases of 12% over the next five years. (Per Edward Jones Analyst Research Opinion – Access via personal Edward Jones investment account)
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