3 Companies You Wish You Could Own
We all love to find a nice reliable company to sink some hard-earned cash into, but sometimes the cards don't fall in our favor. Every now and then, I come across a great company only to discover that I simply can't invest, as the company is privately held. Think of this as window-shopping: You know you can't buy any, but you might get some good ideas. Here are three companies that I'd happily invest in -- if only I could.
The higher end of fashion
Yesterday, a neighbor of mine and I were talking fashion, and he mentioned that the shirt he was wearing was from J. Crew. I couldn't remember who mine was made by, but he nailed it without hesitation. "Banana Republic," he said. "You can tell because the stitching on the sleeves is a bit off." First of all -- ouch. Second, he was right. I was wearing a shirt from the Gap brand.
Banana Republic is Gap's current problem child. The company had flat comparable sales last quarter, and net sales were up just 4%. Out on the hard streets of The Mall, Banana's biggest competition comes from J. Crew, which has experienced a resurgence in the last few years. While the company is privately held, it still reports some financial information each quarter.
In the company's last fiscal year, comparable company sales increased 13%, with revenue increasing 20%. The company's margins expanded all the way down the income statement, and EBITDA jumped 27%. On top of the fantastic financials, J. Crew's fantastic brand is represented in its 240 retail locations, with another 100 or so outlets. If J Crew came back on the market, I'd be first in line to pick it up.
Just kidding -- this is the higher end of fashion
If you don't fancy yourself a buyer of $300 sweaters, maybe you could be tempted by one of Tory Burch's $425 cardigans. Burch is a New York-based fashion designer in the same league as Michael Kors . Her designs have shown up on the shoulders of celebrities across the globe, just like Kors'.
While J. Crew is a more mature company, Burch is just gearing up, much as Kors was a year and a half ago. Bloomberg has estimated that Burch's company may now be worth over $3 billion. Considering that Kors is now valued at over $12 billion, there's a long way for Burch to run.
In addition to its normal line of fashion, Burch has recently entered into an agreement with Fossil for the sale of Burch-branded watches. Fossil is the maker behind Kors timepieces, and the company has said that the high-end designers are both big drivers of future growth. Basically, I see Burch as a way to re-create the magic of Kors -- and that hasn't been a bad thing.
The delicious end of -- well, food
The final company that I'd dive into given a chance is the Five Guys hamburger chain. When CEO Jerry Murrell came by the Motley Fool office last year, I was instantly sold. Not only is the company a purveyor of quality burgers, it's also run in the classic American manner. Murrell is a fan of doing a few things very well, and he's resisted taking on extra menu items.
Unlike J. Crew and Tory Burch, the reason I want in on Five Guys is for the beautiful simplicity of the business. Murrell now oversees a business that should generate over $1 billion in revenue in 2013. While the company is still far short of McDonald's $6.6 billion, Five Guys seems to be managing a feat that McDonald's has failed at over the last few quarters: growth.
McDonald's comparable sales fell 1% last quarter, and another 0.6% in April. Analysts see Five Guys taking business from McDonald's and other large chains, as customers opt for quality over price. That's a move I'm happy to make as an investor as well. As soon as this quality business hits the market, I'm ordering a full meal.
...And a fashion icon you can invest in today
Michael Kors is one of today's hottest high-end fashion brands, and that's translated into one of the best-performing stocks in retail -- since its debut on the market in late 2011, the share price has more than doubled. But with all that growth, has the stock finally become too expensive, or is there still room left to run? The Motley Fool's premium report on Michael Kors gives investors all the information they need to make the right decision. We cover the key must-watch areas, opportunities, and threats to the company that investors need to know. To claim your copy, simply click here now for instant access.
The article 3 Companies You Wish You Could Own originally appeared on Fool.com.Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Fossil and McDonald's. The Motley Fool owns shares of Fossil and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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