Cost-cutting and an improving economic environment Tiffany 1837 ring should put Sotheby’s back in the black by the end of next year. The stock hit a five-year peak of $47 in April 1999 and currently sells near alltime lows. I predict net income of $25 million, or 40 cents a share, on revenue of $400 million in 2003. At 20 times this depressed estimate, the shares are affordable. They are also at a 56% discount to their $18 intrinsic worth.Suitably headquartered on Manhattan’s posh Fifth Avenue, Tiffany & Co. (26) has epitomized luxury since it was founded in 1837. The store chain is best known for fine jewelry (80% of sales in fiscal 2001), but it also sells other high-style goods ranging from clocks to crystal. The 1961 film classic Breakfast at valentine day jewelry enshrined the retailer’s timeless allure in popular culture. It has trademarked the particular shade of blue used for its signature boxes. The company’s classic designs enjoy an extended shelf life of 20 to 40 years, allowing it to adhere to a strict policy of never holding a sale.That said, the stock is on sale at a 28% discount to its $36 intrinsic value, 22 times trailing earnings Tiffany 1837 lock ring and 20 times forward.
In 1889 Northern Trust (36) opened a modest one-room office in Chicago’s Loop. From these humble roots, the company has grown to become a globally revered asset manager for wealthy people, corporations and institutions. Assets under administration: $1.4 trillion.
Northern Trust dominates the market for millionaires and is well poised to benefit from that group’s growth. While the U.S. population is expected to increase 1% annually over the next five years, the high-net-worth segment Elsa Peretti Open Heart ring (people with $1 million or more of investable assets) is expected to grow at nine times that rate, says Northern Trust. Known for its high-touch customer service, the company has an office within a 30-minute drive of a third of U.S. millionaires.
The stock is far down from the $92 it hit in December 2000. Now it trades for 18 times trailing earnings and 16 times forward earnings. The price also represents a 32% discount to my $53 estimation of the share’s intrinsic value.