by Serge Berger | November 27, 2013 8:51 am
Jewelery store operator extraordinaire Tiffany & Co. (TIF) released its third-quarter results on Tuesday before the start of trading. The company reported earnings per share of 73 cents, beating analyst estimates of 58 cents. Top line revenue came in at $911 million, also beating consensus of $889.51 million.
But the company really got investors excited by raising its full-year guidance to a new range of $3.65-$3.75, which is up from a previous $3.50-$3.60 range. The company did better than its peers in the third quarter, as sales in Asia boomed. TIF added that it should benefit from lower input costs for the remainder of 2013, and gross margins should be better than the 57% it saw in the year prior.
Investors and traders rallied the stock to the tune of 8.68% on Tuesday and to a fresh all-time high. The stock was also the best performer in the S&P 500 on Tuesday, helping out the consumer discretionary sector as the second-best sector that day.
With the stock at a new all-time high, where does that mean for TIF stock in the coming weeks? The short answer is “likely higher.” U.S. equities have seen continued sector and group rotation recently. As some groups of stocks break to new highs, others will take a breather before grinding higher again. Given the business that TIF is in, it’s also a good barometer for high-end holiday shopping, and the news it released on Tuesday was music to investors’ ears.
Technically speaking, Tuesday’s breakout is extremely bullish for TIF’s year-end, barring any major outside shocks and quick bearish reversals.
After a strong rally off the 2009 lows, TIF managed to break past its all-time highs in late 2010, but by June 2012 had re-traced to said breakout area. However, this retracement allowed the stock to hit a much higher low than its 2009 lows, all of which ultimately led to Tuesday’s breakout.
On the daily chart, note the supportive candlesticks that are sprinkled on the TIF chart throughout the past several months. Each marks a higher low, which coiled up the stock to jump higher on Tuesday. The resistance line near the $83 area, which had been in place since August, was taken out with one big jump/gap higher on massive volume at the open on Tuesday, leaving the bears no choice but to cover their positions.
In terms of upside targets, TIF stock is trading at all-time highs, which means we have no upside reference levels to focus on, so we must apply measured moves. Given the strength of Tuesday’s breakout, TIF should have another 4%-5% in terms of upside left into year end, which would bring the stock toward the $91.50-$92.00 area.
Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the Essence of Swing Trading e-book by clicking here. As of this writing, he did not hold a position in any of the aforementioned securities.
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