Is This $12 Stock a 3X Opportunity? Stocks To Buy?
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Today we chat about a $12 stock that might be ready to 3x over the next 3 years as long as they make it through this ROni mess. Would you put this stock in the stocks to buy now category or stocks to watch? LMK.
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Hello guys, today in this video, we’re going to do something that I know you guys love when I do this, I talk about an individual stock in which today we’re talking about a $12 stock that could potentially go to $36 a share over the next three years, when I look in depth this company.
I’m explaining to you exactly what this company does, and why it has a potential actually 2x or 3x. Over the coming years. It’s a stock that has been very beaten down and just forgotten about from Wall Street as of right now. Okay, this is not a stock we usually talk about in the channel.
A matter of fact, I think I’ve talked about this stock maybe once or twice in the history of the YouTube channels. I’ve been on YouTube for about four years or a little over four years now. So it’s not the type of stock we regularly talk about on this channel.
They have very famous brands, this company has some very well respected historical brands, including one of them that’s been around since like, like over 100 years ago. Okay. But very famous brands, as soon as I mentioned some of the brands.
You’re going to know more than likely these brands especially the main brand they own Okay, very strong company, usually very profitable, strong balance sheet, usually a very good dividend payer. It’s not the strongest company right now, because of Roni Rona has messed up their business model in a big way.
I mean, really, Renault’s messed up most companies business models in a big way. And this one, especially and even as a stock market has come back this stock has not come back strongly at all. It’s like I said, it’s just kind of been, you know, forgotten about from Wall Street as of right now.
And that’s where we got to look for some opportunities. Okay. And I can pretty confidently say if there was no Roni Rona, this stock right now would be over $30 a share I’m very confident and saying that the business was turning in the right ways.
Things were getting better and better for them very, very recently. And unfortunately, you know, Ronnie Ronnie came out of nowhere and it’s devastated a lot of companies including this one, so this stocks $12 here today instead of you know $30 or $32 or $36 where it would likely be if there was no such thing as Roni Roni Okay.
So hope you guys enjoyed this video as always make sure to smash that thumbs up button for me and if you guys want to get notified every time I ever released a YouTube video go ahead and click that notification bell and you’ll be notified whenever.
I release a video okay, so guys here today we’re talking about a company with the ticker symbol t p r on this one. Some of you guys might know this ticker symbol A lot of you guys probably don’t know is ticker symbol, okay?
This stock is $12.65 this year here today, okay, this stock has been all the way down to $10 range back when the march lows happen in the market was just getting devastate it dropped literally all the way down to like $10 a share.
And it’s been as high as Oh, just over $30 a share in the past 52 weeks. Okay, so you know, needless to say, that’s a very wide range, but when the market has been as volatile as it has been, I mean, you can kind of almost expect that type of volatility.
Okay, this company tapestry ticker symbol TPR look at this back in February, February 12 2020 stocks $29.47 a share. Okay, here we are July 7 of 2020. And it’s 12 bucks a share. That’s an incredible incredible fall just off a cliff.
I mean, it’s absolutely incredible mainly because of Ronnie Ron it’s not like the the management team has messed up the business model or or done anything really wrong. It’s just man, it’s just a once in 100 year event that’s happened and we’ve seen this with a lot of stocks.
It’s just the difference with tapestry is it has come back some since March lows, but it hasn’t come back that strong. We’ve seen a lot of stocks you’ll come back, you know 50% 100% some of them 200% since those March lows, tapestry TPR definitely not that type of stock market capitalization on this.
It’s a smaller tape company. Okay. A $3.49 billion market cap so not some huge you know, massive company out there. decent size okay tapestry if you never heard of this company tapestry Inc is a New York based House of modern luxury lifestyle brands.
Our company’s portfolio includes the coach Kate Spade, New York and Stuart Weitzman brands, our company and our brands are founded upon a consumer led view of luxury that stands for inclusivity in approachability which means a little more affordable.
Okay, so coach brand I know like 80 to 90% of my audience are males okay? But still, even if you’re a male, you still must know the coach brand, okay? They’re known for purses and handbags in general in wallets as well. And they’re priced at usually in the $100 to $400 range.
So they’re usually going after more like middle class consumers. I actually have a coach wallet if you didn’t know coach actually makes some men’s products as well. Not very many of them, but I actually have a coach wallet.
I had that since I bought that back when I lived in Charlotte, North Carolina like 2014 I think, and I still use it to this day it’s a great wallet is it does everything I needed just hold a few cards I take around, debit card, couple credit cards license, put a little cash in the middle boom man like that’s the wallet for me.
It’s been the wall for me for like years now. And I still use it To this day, okay, Kate Spade if you don’t know Kate Spade, they’re kind of like more of an up and coming coaches. Let’s put it that way.
Very successful company. They sell handbags, clothing, shoes, jewelry, wallets, very strong brand, but they’re mostly known for handbags as well. And they’re also competing in that $100 to $400 price points, okay.
And their main competitor if you think about Kate Spade, and coach and whatnot, their main competitor is really like Michael Kors. But you can see their bags and their walls and things like that. That’s a main place they compete.
Now last brand, this company owns tapestry, they own a brand called Stuart Weitzman, this company makes footwear products, okay, high heels, sandals, items like that, even boots, okay, and a lot of women that you know, want to spend $300 to $700.
Somewhere in that type of price point, they will shop at Stuart Weitzman, and this company is definitely a growing brand that seems to be getting more and more popular over time, and they should end up doing a lot better over time with Coach being behind them.
So $300 $700 price point is what they’re going after. If you go to Stuart Weitzman bestsellers, you’re going to find these sandals are actually their bestsellers they sell for $375. Now, I know like, you know, because my audience or you know.
Like I said like 80 90% males, mostly you guys are smart enough to realize like you just because you personally don’t want to buy something doesn’t mean you know, women don’t love these type of brands.
And you some people look at this, like 10% audience, I’ve seen these type of comments. They’re so ignorant. It’s like, oh, who cares to spend $375 on a purse or a pair of sandals, just go get some sandals at Walmart?
like who cares? Okay? It’s just like a really ignorant statement. It’s like, Why does a guy want to go spend, you know, $10,000 or several $1,000 to buy a Rolex watch if he has that type of money. Like, why not just go to Walmart and buy a $24 watch or go buy a Casio watch at Walmart for $11 right? They both tell the time they both do the same thing.
They both sit on your wrist, it’s like you can’t even compare them. They’re apples and oranges. Men will spend 1000s or 10s of 1000s of dollars on watches if they have that type of money because at the end of the day,
It just makes them feel different know the different than, you know, a certain handbag or a certain pair of shoes will make a woman feel different. Okay? Like like why would I go out there and spend $100,000 buying a Tesla Model X like surely wasn’t to save the environment.
I can tell you that like I’m not gonna be su like had nothing to do with environment. Well, I could have just bought you know a Honda CRV for 25k. Right? Well, here’s the thing. Model X is sick. Okay, a Model X is flippin amazing. You know, the Falcon doors.
It goes fast. It looks you know, insane. Like, that’s a Model X. You know, no, no, no disrespect anybody that drives a Honda CRV, but you know, it’s a little lame. And I think anybody that drives a Honda CRV would honestly tell you that, if you ask them like you really like that, like, No, it’s just to get me to point A to point B and they both do the same thing. Right?
But at the end of the day, people are spend up if they’re, they feel different because they get something else. Kay, a coach bag. A nice bag. Okay. Walmart bag for 15 bucks, you know? No, okay, let’s just put it that way.
Okay, and by the way, these price brackets you’re seeing I know that some of you guys might be like, Whoa, this is expensive. No, not really. Okay. Expensive purchase. You really want to you know, talk about multimillionaires and people that have $100 million.
Like what are they spending on handbags? They’re spending 40,000 to half million on the amaze Birkin bags. Okay, those are what the people with crazy money are spending on. And right below that you have Louis Vuitton, which usually Louis Vuitton’s are going for, you know, 2000 to 10,000. Somewhere in there. Okay.
So there’s different price brackets, what these brands are really going after they’re going after the middle class. They’re going after the upper middle class women worldwide that is their customer base, middle class, upper middle class, so anybody that’s making like 40k to like 200k 250k that that is what coaches customers are.
That’s Kate Spade that Stuart Weitzman those are the customers going after. And most folks especially in developed countries make between 40k and 200k. So that’s a great news for obviously a company like coach that’s really going after them right.
Not everybody can afford a $50,000 Birkin bag, but a whole bunch of people can afford a $200 you know, purse or handbag from coach. Okay. Now when it comes to TPR, this is a stock that back when the business was clicking on all cylinders back in August 2018.
So less than two years ago, this stock was over $50 a share the business was clicking on all cylinders, things were going great. Then they started making a few mistakes. And they had a little short term trouble in the business, especially around the store.
Weitzman and Kate Spade acquisitions and it kind of took away from profitability here in the short term then you also uncompounded running Rona and also in the stock has gone from 50 something dollars a share less than two years ago to 12 bucks here today.
But the past is a past we get to focus on where the business is at now and where the business is going in the future because that’s going to be what dictates whether we make a bunch of money in the stock, whether it’s an opportunity or it’s not an opportunity.
Okay, so when we look at an income statement for this company, Honey, we’re gonna see the numbers are actually pretty dang impressive from $4.4 billion in revenue in 2017, all the way over $6 billion for their fiscal year of 2019.
Okay, net income has gone from 591 million, then they do a huge dip probably around the acquisition down to 397 million, then this past year, all the way up to $643 million of net income. So what you’re going to see there a little bit of inconsistency in net income, mainly because of some acquisitions, but overall, the numbers are up, and the business is always very, very profitable.
It’s a very, very profitable business. It’s not like they’re just producing a bunch of revenue, just to you know, produce revenue. No, it’s like, like, you know, you can expect a 10% of the revenue to hit the bottom line.
If not more than 10%, which is very, very impressive for a company like this. Okay. Now, short term, once again, we get into the short term, you know, Rooney ronnen situation has devastated the business. Look at this is just an quarter over quarter, the December quarter before Ronnie Rona business has very strong operating income $363 million operating income in one three month span.
Okay, then you fast forward to the Ronnie rorona quarter, unfortunately, a $207 million operating loss. It’s just a, you know, an incredible difference in just one quarter over one quarter. Okay, so there’s no question, Roni, Rona has messed up the business model, big time, it will likely continue to mess up the business model for at least the next few quarters.
Okay, for let’s just say the rest of 2020. Let’s put it that way. Okay. It’s just devastating effects. However, if you think about is this company going to go under something like that? Well, they have a quite a bit of cash and cash equivalents on the balance sheet, as of the latest quarter at $898 million in cash and cash equivalents along with short term investments.
Also, keep in mind, this is tapestry This is a company that owns phenomenal brands is a you know, a very profitable business, you know, pretty much doesn’t matter what’s going on other than a once in 100 year business event where essentially, they have to close down their stores outside of that this is usually amazing business.
So if this company needs to raise more capital, or take out debt, they’ll likely be able to do it because it’s tapestry, okay, it’s actually a really strong, amazing company outside of this one scenario, okay, so they’re well capitalized the chance to go under pretty low, long term debt on this company of 1.5 billion.
But keep in mind that is long term debt. It’s not like that debt, do you know, tomorrow or next month or next year or something like that? That’s several years out that long term debt is due over time, and they’ll probably just roll that debt over in the future, especially with interest rates being so incredibly low right now.
Okay. stockholder equity on this company of $2.5 billion. Right now, as of their latest quarter of $2.5 billion stockholder equity. The number is very important because remember, we’re only paying if we’re buying the stock here today, we only pay $3.49 billion, roughly.
Okay. So essentially, we’re only paying a billion dollars more market cap wise than what the stockholders equity is right now. That’s very intriguing. If you think about it from a value proposition. This is a dang interesting value proposition on tapestry at the moment, okay.
Now remember, I said this business is being devastated right now. This is the whole negative thing we’re tapestry is just how bad this business is devastated right now. Look, what analysts have the company shrinking their revenues in this this next quarter that will be reported here in about a month or so. Right.
They have revenues going down nearly 59% year over year. That’s extraordinary. neurone, Rona has devastated the business model. Look at that year ago, sales 1.5 1 billion, this quarter is expected to only be 622 million. Okay, which still seems like an insane number, right.
But for tapestry, that’s not good. That’s not good at all. And when you see negative 59% revenue, like like at the end of the day, that’s going to mean there’s going to be a massive loss and bottom line mass loss there’s just no way of shifting around that even if you are the September quarter analysts are expecting 15% revenues to be down we’ll see what that shakes out.
I’ve seen some people thinking it was only gonna be down 10% some folks are thinking it’s gonna be down 20% Plus, but regardless, in September quarter, this company could take a nother loss on the bottom line.
So it’s it’s almost a given that they’re going to take, you know, several 100 million dollars of loss in the in the quarter is going to be reported here in about a month or so. And the big wildcard is do they lose like 50 million in September quarter is it like 100 million as a 200 million.
What ends up being that number, the current year in total, they’re expected to see revenue shrink 19.1% unfortunately, just, you know, a horrible year, let’s just put it that way. Okay. However, on the flip side, 2021 is seen as a recovery year out there, they are expected to grow revenue 7.8% in 2021.
I do expect the company to get back to growth in 2021. Maybe not the first quarter, but as soon as it’s kind of like the second quarter third quarter hits, in my opinion, the company will likely get back to growth, you know, start growing revenues again, in my opinion, the company will end up getting probably profitable on a quarterly basis.
By about the third quarter, the fourth quarter of 2021. In my personal opinion, some folks feel like they could even be profitable at some point, you know, maybe in the fourth quarter of this year. And I don’t want I like to go into these stocks a little more cautious, especially short term with everything that’s going on the changing developments around Roni grown and whatnot.
But regardless, the company should get back to growth next year. And that’s going to be huge for the stock price and huge for the business model overall. Okay. Now, the, you know, the valuation, we keep going back to this evaluation, just so dang compelling.
Remember, market cap was, that’s actually a little higher than it actually is. It’s actually about $3.49 billion more capitalization right now. So stock that new usually trades $9 billion plus, and this is where we look at this as a, you know, a very much a possible 2x, if not 3x plus candidate in the future years, okay.
So in my opinion, all it has to happen with TPR tapestry here, they just have to make it through this Roni rotten mess, if they can just make it through this, which once again, we looked at the balance sheet.
I would say there’s a pretty good probability they’re going to make it through this okay, as long as they make it through this, this stock should be a two to 3x stock over the next three years. Okay, I think it very much has a possibility to be a 3x stock over the next three years.
And you know, this is a stock I’ve honestly got to buy much harder and much faster, especially if it approaches anywhere near that $10 number hit at those March lows because the risk reward in this one is pretty dang attractive.
I like anything where I have a possibility of 3x in my money or 2x in my money in a three year span. That’s a pretty dang good ROI on that other than maybe like Tesla’s stock or something maybe Tesla stock that wouldn’t be a good ROI. But for any normal stock if you get two extra three extra money in a three year span, that’s pretty dang amazing.
Okay, so guys, I’m looking forward to this one probably going to be one I’ll likely buy heavily over the next few months. I would love to hear your guy’s opinion on this stock in the comment section. And don’t forget down there in the description.
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That will definitely be something that helps you out. Thank you for watching and have a great day.