Tiffany & Co. (TIF), Coach, Inc. (COH), Saks Inc (SKS): Luxury, an Investor’s Best Friend?

The price ratios at Coach are incredibly appealing, especially considering the high growth numbers that they’ve been experiencing. The P/E ratio at Coach is 13.4, right around the S&P 500 P/E. The price to tangible book is a little on the high side at 8.78 but I really don’t think that Coach is going to run into any issues that would cause investors to have to worry about this figure.

Coach has a dividend too! It’s actually quite a nice one at 2.5%! Oh, I should also add that there is no long term debt at the company. That’s right, a LT debt to equity ratio of 0!

A Shopper’s Paradise

Saks Fifth Avenue is the wealthy shopper’s paradise. The store carries designer clothing and accessories for both men and women at their stores across the United States.

Earnings at the department store grew by 56% last year and revenues are growing over the three year time frame too. If we take a look at what the analysts believe is coming over the next two fiscal years we see no growth in this current year but 13% growth in the following year.

Unfortunately for Saks, I don’t think their pricing metrics justify their 13% growth over two years. The P/E at the company is an incredibly high 23.7. Sure, Saks will be around for a long time to come, but do you really want to pay almost 24 times 2012 earnings to own it?

Another thing that I’m not too keen on at Saks is the lack of dividend. Both Tiffany’s and Coach offer pretty nice dividends that would go great in a dividend investor’s portfolio; Saks does not.

Bottom Line

I like both Tiffany’s and Coach at their current levels. Of course, you should monitor the stocks yourself and wait for the perfect buying opportunity. I’d definitely recommend avoiding Saks, unless there is a major pullback in the near future.

The article Luxury, an Investor’s Best Friend? originally appeared on Fool.com and is written by Ash Anderson.

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