Zale Corporation (NYSE:ZLC)
Zale is a specialty retailer of fine jewelry in North America. “Diamonds are a girl’s best friend” on Valentine’s Day, and Zale has some good prospects for growth that should make investors cautiously optimistic.
Zale has not been able to generate revenues in the past four years and had net revenue of negative $1.9 billion as of July 2012. The company’s earnings actually declined 78% in the past five years, and Zale’s shares, sitting at around $5 per share, are well below the former glory day levels of around $30 prior to the start of the most recent American recession. However, Zale is expanding its market share somewhat and reported holiday gains. Also, on Valentine’s Day of 2012 the stock was only at around $3–today it’s at $5. Therefore, the long-term prospects for Zale are quite uncertain, but for the short-term Zale appears to be picking up the pieces from the global recession and moving forward.
Brinker International, Inc. (NYSE:EAT)
Brinker International is the company behind Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) restaurant brands. Restaurant stocks, in general, are not investments for the faint of heart. The restaurant industry has particularly fierce, grueling competition, and Brinker International has some issues that need to be improved in order for the company to become more competitive.
Unlike Limited Brands, Brinker has a well-established worldwide market presence and has effectively expanded into worldwide markets without spending huge sums of money. This approach is easily replicable by competitors, but it does give a solid return on investment for Brinker.
However, Brinker has a substantial debt load to shoulder and faces erratic earnings. In fact, Brinker has seen its revenues shrink almost every year since 2008, according to financial reports from the company. The restaurant industry as a whole is subject to rising food costs and global economic uncertainty. Overall, Brinker International has got some good things going for it: great brands, a good international presence, and an effective business strategy. On the other hand, the company hasn’t shown much significant growth over the past five years. As of now, there are probably more stable restaurant options out there than Brinker International.
Conclusion
When examining different companies, it is important to read between the lines and not judge a company’s entire performance over only one holiday such as Valentine’s Day. One should not get caught up in short-term euphoria or a shortsightedness of long-term goals and profitability. However, Valentine’s Day, as well as other holidays, provides investors with an opportunity to gain from short-term bumps in stock prices. Holiday sales do provide us a glimpse into how a company might fare for the other times of the year. When looking at Arthur Pinkasovitch’s five Valentine’s Day stock recommendations he made on Valentine’s Day 2012, we can observe mixed results. If an investor did buy all five Valentine’s Day value stocks on Feb. 14, 2012, his portfolio would have realized some gains, but that might not hold true during 2013. Overall, American Greetings, 1-800-Flowers, and Brinker International are most likely going to stay locked in mediocrity for the near future, whereas Limited Brands and Zale actually do have some potential to grow and become Valentine’s Day treats for investors.
The article 5 Valentine’s Day Value Stocks – Revisited originally appeared on Fool.com and is written by Evan Buck.
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