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Is Kate Spade More Fashionable than Texas Instruments?

Should You Sell Kate Spade?

Summary

  • Kate Spade posted 1st quarter FY2016 results for period ended 31 March 2016 that exceeded analyst expectations, but upcoming retail sales gloom looms.
  • The company’s business fundamentals are under tremendous pressure, with intense competition in its product segment in order to capture customer loyalty.
  • The company has experienced stagnant to mild revenue growth for 5 straight years, with no solid revenue growth visibility in the coming quarters.
  • The stock is trading at expensive valuation levels considering its weak financials.

Kate Spade isn't so hot right now but you may want to get "fashionable" with Texas Instruments.

Kate Spade & Co (NYSE:KATE) is a fashion retail company that sells a wide range of women's and men's wear designed in-house via its own retail boutiques strategically located at high end shopping streets. Its apparel, accessories and fragrance products are marketed under its flagship Kate Spade New York labels. The share price has been trending upwards since 2012 from $9.61 to an all-time high of $39.69 at the end of July 2014. The share price began trending downwards and hit a recent low of $16 per share in February 2016 before recovering. Currently, it is trading at around $23.70 per share. Weak business fundamentals in the coming quarters could spell trouble for its share price and limited upside is foreseen for Kate Spade... CONTINUE READING ON SA



Texas Instruments: A Cash Cow You Can't Ignore

Summary

  • Performance of the analog segment in Q1 fiscal 2016 was disappointing.
  • In the long-run, TXN has the potential to strengthen its top-line.
  • TXN’s capital-light business model allows it to generate loads of free cash.
  • None of TXN’s direct competitors can match the company’s cash-generating potential.

Texas Instruments (NASDAQ:TXN) sells semiconductors to electronics designers worldwide. In the last decade, TXN has become a highly capital-light business owing to the ever-increasing focus on analog and embedding processing technologies. This is one of the biggest reasons why the company stands out in the semiconductor industry. Analog and processing technologies are omnipresent as they are an integral part of virtually every electronics device. Little wonder then, that the market for these technologies is huge. The size of the analog market alone is $45 billion and TXN, with a roughly 15% share, shines as the biggest player in this space.

With a justifiable and pragmatic strategic focus, TXN certainly has the potential to achieve sustainable growth. In addition to this, the company's cash-generating potential and an unwavering commitment to returning value to its shareholders also add to its risk-reward profile... CONTINUE READING ON SA

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