PVH, seeing growth, is rated ‘buy’
Question: Shares of PVH Corp. were recently recommended to me. What can you tell me about this company?
Answer: Its name may sound generic, but its apparel brands are known globally.
The former Phillips-Van Heusen Corp. changed its name in June to signify a widened international scope. The Calvin Klein brand, which it acquired in 2003, and Tommy Hilfiger, purchased in 2010, together represent more than three-fourths of its revenue and profit.
Its sales outside the U.S. have grown to an estimated 40% this year from 10% in 2009.
An investor’s bet on its future depends on confidence in its ability to raise profit internationally over its wide range of clothing styles and price levels. It operates in a fiercely competitive business directly affected by the economy and driven by fashion trends and price.
Shares of PVH are up 6% this year. Boosted by strong sales of its two leading brands, it posted a second-quarter profit of $67 million, compared with a $71-million loss a year earlier.
Other PVH-owned brands are Van Heusen, Arrow, Izod and Bass.
In addition, the company holds licenses to brands such as Chaps, Geoffrey Beene, DKNY, Michael Kors, Sean John, Timberland, Donald J. Trump Signature Collection, Kenneth Cole New York and Kenneth Cole Reaction. It also has a number of company-operated retail outlet stores.
The consensus Wall Street recommendation on shares of PVH is “buy,” according to a Thomson Reuters survey of analysts, consisting of five “strong buys,” seven “buys” and two “holds.” The company continues to use its cash flow to cut the significant debt load it has carried since its major acquisitions.
Another plus: At the company’s core is its men’s dress shirt and neckwear business, which benefits from a generally older and more stable customer base.
Vanguard foreign fund ranks high
Question: Is Vanguard International Growth Fund a good choice for my retirement account?
Answer: Three separate growth-oriented investment teams manage pieces of this somewhat-aggressive fund, whose emerging-market stocks have been hit hard over the last year.
It has tended to outperform in up markets and provide above-average protection in down markets. One benefit over the long haul is its annual expense ratio of 0.49%, which is low for an actively managed international fund.
The $15-billion Vanguard International Growth Fund (VWIGX) is down 7% over a 12-month period to rank in the middle one-third of foreign large growth-and-income funds. Its three-year annualized return of 13% places it among the top one-fifth of its peers.
“This is a core holding for an individual’s portfolio,” said Karin Anderson, mutual fund analyst with Morningstar Inc. “It doesn’t have any small- or micro-cap exposure, but it is still diversified in terms of the sectors in which it invests.”
Schroder Investment Management North America Inc. and Baillie Gifford Overseas Ltd. teams each run more than 40% of assets, while M&G Investment Management Ltd. handles about 10%.
Their stated goals are not fundamentally different: Schroder looks for quality growth and valuation along with macroeconomic and thematic viewpoints, Baillie Gifford seeks strong balance sheets and significant structural economic changes while M&G stresses high quality.
The fund’s top holdings include China’s Baidu Inc. and Tencent Holdings Ltd.; Switzerland’s Novartis; Sweden’s Atlas Copco; Britain’s BG Group, BHP Billiton and Rolls-Royce Holdings; South Korea’s Samsung Electronics Co.; and France’s PPR. This no-load fund requires a $3,000 initial investment.
Andrew Leckey answers questions only through the column. Write to him at yourmoney@tribune.com.
