L Brands Inc (LTD): What Is Victoria’s Secret When It Comes to Investing?

Urban Outfitters, Inc. (NASDAQ:URBN) operates a trendy clothing store chain and is known for having graphic tees and tanks that come in and out of style. Perhaps the advantage of owning a trendy store is that it forces the hipster crowd to shop more frequently to stay in style. Anyhow, analysts on a consensus basis anticipate the company to grow its earnings by 16.70% for fiscal year 2013, and to grow earnings by around 15.32% on average for the next five years. The company trades at a 26.2 earnings multiple which is pretty rich relative to the projected growth, but then again investors are chasing stocks that can consistently out-perform the broader market. This particular stock has rallied by 62% from its 52-week low.

Macy’s, Inc. (NYSE:M) is one of my favorite department store and discount retailers. The company’s paid celebrity endorsement from Justin Bieber along with its safe and stable business model merits investment from yield-seeking investors. The company is known to be an anchor tenant at mall properties all across the United States. Its stores carry products from Ralph Lauren Corp (NYSE:RL), Calvin Klein, Burberry, and Gucci. With a strong portfolio of products, well-designed stores, and a solid marketing strategy, Macy’s, Inc. (NYSE:M) has a competitive advantage. The company is projected to grow by 14.38% on average over the next five years. A 2.04% dividend yield also comes with the package.

Conclusion

Fashion retail in general is a strong investment opportunity. L Brands Inc (NYSE:LTD) has proven that it can deliver upon earnings guidance. Given the favorable economic environment, almost every other fashion retailer has been able to do the same.

Cutting costs, opening more stores, re-modeling stores and effective marketing have been the hallmark of fashion retail growth. Fashion will stay in touch with the times and offer the yield-seeking investor a steady and effective way to out-perform the broader stock market.

The article What Is Victoria’s Secret When It Comes to Investing? originally appeared on Fool.com and is written by Alexander Cho.

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