Everyone loves payday. Just like everyone else, once I get that sweet deposit in the bank it starts burning a hole in my pocket. Before much time I am ready to blow it all on a shopping spree. My store of choice is the stock market, and I’m shopping for the best deals on companies. Here is what I dropped my $1,000 on this Friday, August 31st.
L Brands (LB)
The eighteenth pick of the Let’s Be Millionaires investment series goes to L Brands.
L Brands is the parent company of Victoria’s Secret, Bath and Body works, and a few other smaller names.
L Brands has been struggling this year. Sales just aren’t what Wall Street expected. Being in an intense downtrend is what makes this pick a risky one. I think that L Brands can turn things around but trying to time that in a stock purchase is a risky proposition.
Check out the L Brands investor website here.
About The Stock
LB stock has been around for decades. The stock had a pretty stellar performance coming out of its 2009 recession lows rallying from $6 a share in 2009 all the way up to a high of $100 a share in December of 2015. Since the beginning of 2016 though the stock has been headed downwards. This year alone the stock has gone from roughly $60 a share down to $27 a share. At this point I am a buyer. Some of the best gains can come from picking up stocks that have fallen out of favor temporarily if those companies can turn things around.
Some other attractive things about the stock include its dividend and its P/E. The current dividend is 8.87%. This means that for a $1000 investment I will receive almost $90 worth of dividends over the course of a year. Not too shabby. The P/E ratio is also sitting at 9.5. This is a very low multiple. Lower than the market multiple as well as the average P/E for the retail sector. This can be an indicator that the stock may be underappreciated.
The market cap of L Brands is currently 7.5 billion. This stock could be categorized as an international, mid-cap, consumer discretionary stock.
The speculation for this one is all about L Brands, and more specifically Victoria’s Secret, being able to turn things around. I would love to see them somehow get into the athleisure space because brands like Lululemon have been crushing it for the past few years.
If they can stop the ridiculous discounting and still move their merch we should see a brighter future ahead for LB stock.
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