Oprah’s highly anticipated Favorite Things episode aired today leading to the usual screaming and crying from audience members thrilled to be gifted the items on her list. Don’t you wish you were in the audience for one of those shows?
Alas, this is the last season of the Oprah Winfrey Show and, presumably, this is Oprah’s final Favorite Things episode.
Retailers have long known that Oprah has the golden touch. Products that have appeared on her shows have leapt off of shelves. Her Favorite Things list is one of the most highly prized product placements in all of retail.
Investing in the Favorite Things
Even if you weren’t lucky enough to be in the audience, there is still a way to benefit from her Favorite Things list.
Take a look at the list. A surprising number of publicly traded companies have their products on the show this year.
These companies are clearly making “hot” products as Oprah is usually finely tuned into the trends. Some of the stocks, not surprisingly, are hot too. Netflix and Polo Ralph Lauren, for instance, are trading at all-time highs.
Investors, it would seem, have already discovered that these two stocks are their favorite things. Still, several of the companies are trading with solid fundamentals and several also have outstanding growth stories.
6 Companies Making Oprah’s Favorite Things
1. Polo Ralph Lauren – Cashmere sweater and throw ($498)
2. Williams Sonoma – Breville Panini Press ($100)
3. Lululemon – Drawstring pants ($98)
4. Netflix – 5-year subscription (about $539.40)
5. Nike – 4 pairs of Nike “Free Run+” shoes ($85 each)
6. Royal Caribbean Cruises – 7 Day United/Royal Caribbean Allure of the Seas Cruise (no price given)
Polo Ralph Lauren (RL) the upscale retailer is poised to have a good holiday as luxury is back in vogue. Polo Ralph Lauren is a Zacks #1 Rank (strong buy) stock trading with a forward P/E of 20.
Williams Sonoma (WSM), the furniture and household goods retailer which also operates Pottery Barn, recently saw comparable store sales jump 8.1% in the third quarter but alluded to possible promotions during the upcoming holiday seasons to move merchandise as customers continue to look for value. Williams Sonoma is a Zacks #2 Rank (buy) stock and trades at 18x forward estimates.
Lululemon (LULU) sells upscale yoga and athletic clothes and products. The drawstring pants on Oprah’s Favorite Things list have long been favorite for busy moms, and not just for doing yoga. The stock has been hot with investors and now trades with a sky-high forward P/E of 40. But the growth story is there, with earnings projected to rise by 50% this year and another 20% next year. LULU is a Zacks #2 Rank (buy) stock.
Netflix (NFLX) has been an investor darling since the economy started turning around in 2009. The stock has been on fire. Is it too hot to handle now? This Zacks #3 Rank (hold) stock is clearly not cheap, as its trading at about 60x forward estimates. But analysts expect 42% earnings growth in 2010 and 34% in 2011.
Nike (NKE), the iconic shoe manufacturer, has one of the strongest brands in the world. It is expected to grow earnings by 13% in fiscal 2011 and 12% in fiscal 2012. The company is a Zacks #3 Rank (hold) stock.
Royal Caribbean (RCL) expects record earnings in 2011 as travelers once again get the vacation itch. The Allure of the Seas cruise ship on Oprah’s Favorite Things is the company’s newest ship and one of the largest in the world. RCL is trading at 17x forward earnings. Analysts expect this Zacks #3 Rank (hold) to grow its earnings by 33% in 2011.