The Stock With Most Potential In The 52nd Week – , L Brands (NYSE:LB) in Focus

389

By Chris Hillman on November 29, 2014 Company

When it comes to stocks, L Brands (NYSE:LB) is not a famous name. Even generally, L Brands (NYSE:LB) is not a name known to the public, because it does not have any stores with the “L Brands (NYSE:LB)” name anywhere. However, the company deserves a lot of fame, because it is the parent of two very famous brand names: Bath & Body Works, and the lingerie kingdom Victoria’s Secret. As it does not have much demand in the market, stocks for L Brands (NYSE:LB) are still cheap. However, they are paying out dividends, which is ultimately pushing the stock prices up. A golden opportunity to step in and grab the early bird opportunity by the neck.

L Brands (NYSE:LB) has performed well this year, with its average growth rate in sales reaching 3% for the first half of 2014, a much better figure compared to the 2% of last year. But the real performance indicator lies in comparable figures L Brands (NYSE:LB) released for the month of October, comparing itself to competitor brands to showcase how it is outperforming them. Where many retailers suffered, L Brands (NYSE:LB) has remained headstrong and even improved.

One such comparison has been released with GAP (NYSE:GPS), a famous clothing brand. In its third quarter sales report for the year 2014, GAP (NYSE:GPS) showed a decline in sales amounting to nearly 2 %, which is a figure much below than the 1% increase it experienced last year in the same timeframe. Comparing with GAP (NYSE:GPS) has been a practice of many brands in the industry, as GAP (NYSE:GPS) deals in all sorts of clothing.

Growing sales is not the only feat L Brands (NYSE:LB) deserves credit for. In the same period, L Brands (NYSE:LB) has succeeded in growing its operating margin from 13.9% to 14.1%. Increase in the operating margin while sales are also rising is a good sign for investors, because it showcases a company’s ability to increase its sales without compromising on production functions and without giving out too many discounts.

Such a positive increase in figures only results in a positive cash flow increase. The company, prior to 2014, experienced a negative cash flow value of almost $29 million. Due to the increase in sales figure and the operating margin, the company managed to shift its cash flow figure from a negative to a positive, resulting in a value of $97 million.

The great thing about L Brands (NYSE:LB) is direction it sent its positive cash flow. Immediately, the company thought of its investors, and paid out its 159^th consecutive payment of dividend in September. Overall, the stock of L Brands (NYSE:LB) has a total yield of over 1.7%, and just in this year the company has managed to increase its price per share by almost 35%.

L Brands (NYSE:LB) is growing, nationally and internationally. More stores mean higher figures, higher figures mean higher share yield and value. The company is pervasively present in the UK and Australia, where sales have been much stronger compared to the US. More growth internationally holds a lot of potential for L Brands (NYSE:LB) shares, and makes it a worthy investment at this point in time.