Barron's Says Tiffany's (TIF) Is Undervalued

Barron's Weekday Trader column came out with bullish piece yesterday on Tiffany's (NYSE: TIF). The column said Tiffany's is at a record low valuation and should regain its value within a few years.

Tiffany's has fallen 59% so far this year and is trading at a record low forward price-to earnings ratio, as the global economy has weakened. Barrons said, "...with profits expected to start recovering in 2010, Tiffany offers a compelling investment opportunity, particularly since the stock price already reflects a very bleak year ahead."

Tiffany's has moved to cut costs and scaled back new store openings and plans to eliminate jobs.

Barron's believes Tiffany's shares are incredibly cheap at 8.7 times forward earnings, the stock trades at an 18% discount to the S&P 500. Barron's also likes Tiffany's 3.4% dividend yield, which is stronger than the S&P 500 and 10-year Treasury.

Barron's thinks that Tiffany's could gain additional market share as smaller, mom and pop jewelry stores go out of business.

"The shares [Tiffany's] are attractive right now, but you must be patient," says Larry Coats, CEO of the Oak Value Capital Management. "This is a good business with good management and the stock now trades at bargain valuations. That is what people should look for right now."

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