Something I talk about all the time is how people know so much more about investment opportunities than they give themselves credit. Think of it this way: At the end of the day, you create the market.
Back in 2015, I wrote an article about the best stock picker I know. Most people would answer with an obvious investor, such as Warren Buffett, Carl Icahn or Peter Lynch. For me, however, my mom was the best investor in the world.
She didn’t spend her time picking stocks, but indirectly she was fantastic. She always gave me advice on places to buy from; and after looking into the stocks of these places, I always found that they were great investing opportunities.
I bring this up because I’ve recently found another great stock picker: my granddaughter, Cassidy. She’s helped make me an investing genius! Her love of Walt Disney Co (NYSE:DIS) has helped my clients and I make a lot of big money, but the stock I’m writing about today is Carter’s, Inc. (NYSE:CRI).
Why CRI Stock?
If you have, or ever have had, young children, you know this company. It’s the largest branded marketer of apparel and related products for babies and young children in the United States and Canada. The company has many brands, including Carter’s and OshKosh B’gosh, which are two of the most recognized in the marketplace. Its products are sold in department stores, national chains and specialty retailers, both domestically and internationally, as well as through more than 1,000 company-operated stores and online.
Carter’s experienced a record year in 2016, and it’s fourth-quarter report was simply the icing on the cake. Adjusted earnings increased 27.9% year-over-year to $1.79 a share and revenue grew 7.8% to $934.2 million. Both results beat the Street, which had estimates for $1.68 a share on the bottom line and $914 on the top. For the full year, the company saw earnings of $5.08 a share on revenue of $3.2 billion.
On the conference call, CEO Michael Casey said:
“The fourth quarter represented a strong finish to another record year of sales and profitability for Carter’s. Our focus on providing the best value and experience in young children’s apparel, extending the reach of our brands and improving profitability enabled us to achieve our 28th consecutive year of sales growth, improve our margins and increase the return of capital to shareholders.”
But the good news doesn’t stop there. Management provided full-year guidance for adjusted earnings growth of 8%-10% to $5.55-$5.65 a share and 4%-6% revenue growth to $3.33-$3.39 billion, both of which beat consensus estimates. They also said their goal is to grow revenue roughly 6% per year over the next five years, which would put sales above $4 billion by 2021.
Forecasts for the current quarter were lower than expected (revenue growth in the low single-digits and adjusted earnings of 80 cents to 85 cents a share, down from $1.05 a share last year), but management reminded investors that the first quarter is typically their smallest of the year in terms of sales. Plus, this year’s Easter holiday is later than it was last year, which will likely push some sales to the second quarter.
The strong report sent CRI off to the races on Feb. 23, and while CRI stock still has a ways to go before reclaiming its highs of last spring, it is back to trading at year-to-date highs.
The retail industry has come under pressure lately following President Trump’s support of a border-adjustment tax — which I don’t think will make it through — but with consumer spending on the rise, CRI is worth your attention.
Plus, my granddaughter likes their clothes, and you can’t really argue with that, can you?
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