by Kyle Woodley | May 8, 2013 9:00 am
All across the U.S., somewhere between 90 million and 100 million moms are eyeballing the calendar, crossing off each day in anticipation for this Sunday, when they finally get their yearly dues for their round-the-clock work away from work.
That’s right — Mother’s Day is nigh. Fathers are dialing up the local florists, kids are bombarding one another with emails and texts trying to plan out their gifts. Even the most clueless gift-givers merely need to turn on any sports-related channel, and they’ll be bombarded with more ideas than they have money for.
This energized rush to make Mom feel appreciation has turned Mother’s Day into big business, with Americans spending billions of dollars on things like flowers, jewelry and beauty & leisure treatments, plus tens of millions more on cards and other commemorative gifts. And 2013 will be the best year for business ever, with the National Retail Federation predicting an 11% year-over-year jump in spending to a record $20.7 billion.
Thus, Mom isn’t the only one looking forward to Sunday — several publicly traded companies also are hoping for a little extra juice from this annual outpouring. For instance…
In the kingdom of no-brainer Mother’s Day gifts, flowers wear the crown. Which publicly traded pony to back isn’t as obvious, but pretty close.
The two biggest names battling for your attention are 1-800-FLOWERS.com (NASDAQ:FLWS) and United Online’s (NASDAQ:UNTD) FTD. Product-wise you could go either way, but your investment dollar would be better spent with FLWS right now.
Not that FTD is a poor company — far from it. Thing is, FTD is only a part of what United Online does; the company also lords over other web holdings, including NetZero, Classmates.com and MyPoints. In fact, FTD will be spun off later this year — and when it does, United Online CEO Mark Goldston is calling it quits. So you’ll not only have UNTD without its successful FTD unit, but in corporate limbo.
For now, you’d be better off putting your chips on 1-800-FLOWERS.com — which, by the way, isn’t just about flowers. No, FLWS delivers an expanding number of Mother’s Day favorites, including gift baskets, candies, candles and stuffed animals (my mom’s favorite).
Thanks to the success of that wide stable of gifts, FLWS expects to grow earnings by 35% this year and another 15% the next. So while the company is loftily priced — 23 times trailing earnings, and 21 times 2014 earnings — after a share-price doubling in the past 52 weeks, it’s for good reason.
If you’re like me, you shudder at the phrases “Every Kiss Begins With Kay” and “He Went to Jared!” But for whatever reason (I suspect subliminal messages), they have helped power retail jeweler Signet Jewelers (NYSE:SIG) to sparkling returns in the past few years. Specifically, SIG has ripped off 900% returns since the depths of the financial crisis, including a nearly 50% return in the past 52 weeks.
A third of the National Retail Federation survey’s respondents said they’d be buying jewelry, and it’s hard to imagine Signet’s wide net — one that includes not only Kay Jewelers and Jared, but JB Robinson, Rogers, Osterman and Shaw’s, among others — won’t catch a big chunk of that spending bloc.
If all goes as planned, this Mother’s Day should go a long way in helping SIG meet or exceed the Street’s expectations for earnings, which include roughly 11% growth in both fiscal years 2014 and ’15. And considering SIG’s recent history of earnings beats, it’ll more likely be on the “exceed” side.
Also a promising sign of stability: Signet has been debt-free for a couple years now, and re-instituted its dividend in 2011, switching from its previous biannual payout to a quarterly one. At a yield of less than 1%, SIG’s no income solution, but the payout has increased by 50% in just two years, so it’s headed in the right direction.
Nothing against breakfast in bed or a coupon for one free footrub, but Mom likely would prefer a gift card to one of Steiner Leisure’s (NASDAQ:STNR) businesses.
That’s because you’d be treating her to, at the least, a modern U.S. spa, or potentially one of Steiner’s upscale locations elsewhere around the globe.
STNR operates a number of global spa brands, including Bliss, Chavana and Mandara, as well as more than 125 cruise ship spas. It also has branched out into other services, including laser hair removal, and it trains masseuses, fitness instructors and estheticians (though Mom probably doesn’t want homework for Mother’s Day).
STNR stock has been stuck in a rut for roughly three years now despite double-digit revenue and earnings growth … and looking further back, Steiner has been a bastion of consistency, growing sales in nine out of 10 years. STNR does expect earnings to slide back slightly this year, but shares remain undervalued across several metrics. So if STNR is able to hit analyst forecasts for 15% growth in FY2014, the stock might finally get some love.
Moms also love memories.
Our basement is filled with bin upon bin of old photos from every family gathering, vacation, holiday, first day of school and extracurricular activity you can think of. You want to organize those, you go to Michaels or a craft shop.
But recent photos are on hard drives and memory cards — and that’s where Shutterfly (NASDAQ:SFLY) comes in. The company allows you to make photo books — either allowing SFLY to take the controls, or adding a bit more of your own creative input — and offers just about any other product you can match with a picture, from frames to mugs to wall art. (However, I draw the line at a pillow with someone’s face on it.)
SFLY isn’t for the weak of stomach, though. The company has turned a decent profit for years, but all of that comes from its Q4, which makes up for three quarters of red ink (and then some) like clockwork. For instance, Shutterfly in 2012 made 61 cents per share despite losses of 29, 27 and 29 cents in Q1, Q2 and Q3, respectively. That’s because the all-important holiday Q4 brought in $1.40.
Even then, SFLY this year is expected to only earn half of what it did in 2012, but the company has been busy on the M&A front in the past few quarters, snapping up TinyPrints and Penguin Digital, among others … and those new branches should accelerate growth by about 60% in FY2014. In the meantime, investors can just hope Mother’s Day helps pare down what’s expected to be a 56-cent loss for Q2.
If the NRF report is to be believed, one of the biggest category jumps for Mother’s Day 2013 will be in electronics — specifically tablets and smartphones — which are expected to grow nearly 45% YOY to $2.3 billion.
There’s a bevy of ways to play this, but perhaps none need a Mother’s Day boost more than Best Buy (NYSE:BBY).
The specialty electronics retailer is enjoying something of a 2013 stock renaissance, but faces enormous long-term headwinds such as “showrooming” and the shift from bricks-and-mortar retailer to online shopping. Earnings and revenues have been in terminal decline for years, a buyout bid by its founder fizzled out, and Best Buy still has outlined few answers for its myriad woes.
However, Best Buy — which offers just about every tablet and smartphone under the sun — stands to benefit should the kids decide to upgrade Mom’s tech gear … you know, as long as enough people don’t look first, then buy at Amazon (NASDAQ:AMZN) later.
Plus, Best Buy also has another offering popular among older-age siblings that go for “group gifts”: appliances. While Mother’s Day gifts tend toward something of the luxury/leisure sort, occasionally the family will take the opportunity to upgrade the household — replacing a squeaky dryer or installing an oven that doesn’t shut off every 10 minutes.
It seems difficult to believe that BBY can keep up a year-to-date run of nearly 125%, but a booming Mother’s Day season might help keep the gravy train running just a little longer.
Kyle Woodley is Deputy Managing Editor of InvestorPlace. As of this writing, he did not hold a position in any of the aforementioned securities.
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