Tiffany & Co. (NYSE:TIF) is a holding company that, through its subsidiaries (including Tiffany & Co.) designs, makes and sells fine jewelry and other keepsake gift items. Its segments include Americas, Asia-Pacific, Japan and Europe. TIF is the poster child of high-end retailing. (Just ask Newt Gingrich!)

Tiffany has been a big relative out-performer to the S&P 500 until the last couple of days, with shares down 9% even though the company beat top- and bottom-line expectations. Even Wednesday’s big market run-up didn’t make much of an impact.

But that doesn’t mean it isn’t a good company or stock. For instance, TIF posted earnings of 70 cents, easily beating expectations of 61 cents, with earnings growing 63% year-over-year. Same-store sales rose 16%, with much of the growth in Asia.

While the company raised its full-year earnings guidance slightly to a range of $3.70 to $3.80, up from $3.65 to $3.75, the expectations for the current quarter were disappointing. The range of $1.48 to $1.58 was below analysts’ expectations for $1.63. More telling, Tiffany’s gross margin slipped slightly to 57.9% from 58.5%.

With analysts focused on the short term, I like the company on a valuation basis on an intermediate-term outlook. Given a guidance midpoint of 3.75, TIF now trades at a more-reasonable multiple of 18 — which is attractive now, given its growth rate. Combined with a decent yield approaching 2%, I look for TIF to head back to the $75 level by May 2012 expiration.

Based on TIF current market price of $67.32 and using a target price of $75, a target date of May 18, 2012, and $1,000 of investment capital, , this is an excellent candidate for capturing some nice upside by buying a May call spread (such as the TIF May 67.50-72 bull-call spread), selling a May put spread or buying the stock.

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