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Why Tiffany And Company (TIF) Is Doomed, Apple As A Model

Tiffany & Co. (NYSE:TIF), Apple (NASDAQ:AAPL)

A case study on why Tiffany and Company (TIF) is doomed using Apple (AAPL).

Disclosure: I have never owned TIF, I trade in and out of AAPL.

Tiffany and Company is surely doomed. As I'm writing this TIF has a market cap of 9.11Billion (surely a bad omen) and a trailing PE of 22.06. TIF is in the premium/high end jewelry business. Why are they doomed? Companies like Charming Charlie, Target (NYSE:TGT), Amazon (NASDAQ:AMZN), Zales (NYSE:ZLC), Gap (NYSE:GPS) are beating them by offering lower priced jewelry. People don't want luxury diamond/gold bracelets they want plastic that looks similar offered for 20-60 dollars and when they want something "real" they want cheaper products made from diamonds and gold from companies like Zale corporation. We expect Tiffany to be out of business in the next few years if they can not adapt and compete. I mean they are selling diamond and gold bracelets with 2000 dollars worth of gold and diamonds for 5000 dollars. This is simply not feasible. If they don't start making plastic jewelry offered in their teal box they are doomed. They will even grow their margins. Think of the profit selling 3 dollars worth of plastic for $100 dollars.

Enough with the sarcasm. It is clear the same mindset is being applied to Apple (AAPL). Apple was resurrected from near death with a strategy of premium products at a premium price. When the iPod and then iPhone was thought to induce a "halo" effect to get consumers to buy Macs this was a good thing. Now the world is upside down and analysts everywhere believe Apple is doomed for this same reason. "Who cares about profits?". Apple is one of the few S&P 500 corporations making lots of money and trading at a realistic P/E and yet they are presumed to be near failure.

Myself and many others like apple products. Have you ever tried to return a broken or messed up Samsung Galaxy S3 to Verizon, AT&T, Tmobile, or Sprint? Have you ever walked into countless Apple retail stores and done the same with your iPhone? Even if we discount the fact that Apple truly does offer a premium experience they also offer a vastly superior experience from a support and product longevity. How far is the Samsung Galaxy S2 behind on Android OS updates versus the iPhone 4?

Oh wait the Galaxy S3 soon to be S4 is no cheaper than an iPhone you say? Well for goodness sake Apple surely needs to copy Samsung because they are eating Apple's lunch.

Apple has an immense lead on competitors in the tablet and mobile phone market. They have proven they can focus on earnings and profit versus other companies and are now being punished for that with some calls to fire their CEO.

In summary,

Apple is still an IMMENSELY profitable company. They have an IMMENSE war chest with minimal cap ex requirements. Apple simply isn't going anywhere. They are in better shape then numerous other tech companies to innovate and grow their business. Ignore the noise created by sell side Wall Street analysts and buy Apple regardless of their dividend potential or new products. When you look at earnings for other stalwarts like INTC, AMD, CAT they aren't doing any better than Apple. Yet Apple has a war chest unlike any other company.

Apple is a STRONG BUY and don't let the parasites steal your shares with extreme negative sentiment not based in reality.

What happened when companies like AMZN make hardly any money and are market darlings and companies like APPL are lambasted for making so much money they don't know what to do with it?


Josh Miksanek

Retail investor

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.