Sunday, September 11, 2011

Luxury Stock Tiffany Is Way Overpriced

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tdp2664 InvestorPlace Go to the "Gifts for Her" web page at Tiffany & Co. (NYSE: TIF ) and you see lots of nice items. You will also notice that the 12 items on the first page sell for an average price of $1,815. That's almost 4% of the median annual income of households in America. This Tiffany pricing model might not seem like much to some well-heeled shoppers, but for many it's one or two months rent. Something's upside down in the world we live in when one person can easily afford to spend 20 C-notes for a piece of jewelry and another can't scrape together the funds to keep a roof over their heads. Tiffany & Co. might sell nice jewelry, but its stock always will be under pressure because of the optics of its opulent product. Current shareholders and potential investors take heed. This stock has no staying power. Tiffany and Allocation of Capital Businesses that sell jewelry for $1,800 a pop generate a great deal of free cash. Tiffany's pricing power is legendary, although not nearly as strong as Coach



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