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Tefron Ltd. (NYSE: TFR) has published its second quarter results, and I feel it's a real success story, once again thanks to its management. I will start from the end by saying that Tefron is now beginning its life as what could be best described as a high-tech company manufacturing lingerie and swimwear.

It is only just beginning since, to judge by its last two quarters, it has now completed its transition stage and embarked on a new strategic program. From this point on, barring the onset of a severe global recession, it will see sustained growth. Why? For reasons that I often reiterate - the company has identified a niche in which it can stand out, and it has an excellent management.

Tefron made a significant move two years ago, when it moved its bra manufacturing plant from New Jersey to the Galilee. In addition, new investors were brought in to replace the previous ones and these injected cash and business management expertise. The improvement can be seen in the company’s sales growth and streamlined operations. Tefron’s earnings per share in the first half of 2006 rocketed by 420% to $0.47 from $0.11. On studying this trend, I conclude that the company is capable of increasing this even further to $1. Even at $0.90, the multiple will still remain at 13. Add to that the dividend of $0.24 a share, (a 2% yield) and you have a stock that is excellent value.

It may well be that Tefron’s stock will take a slight tumble this month and I think this would provide a buying opportunity. It could also be that the statement by Tefron CEO Yossi Shiran, one of the top executives on the Israeli scene, that swimwear sales will fall during this quarter, could be the trigger that causes the drop in the stock’s performance.

TFR 1-yr Chart

Published originally by Globes [online], Israel business news -
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.