Motley Fool: VF Corp. a comfortable market pick

You may not have heard of VF Corp. (NYSE: VFC), but you’re probably familiar with some of the major apparel company’s 30-plus brands, which include The North Face, Vans, Timberland, Wrangler, Lee and Nautica – brands recognized in much of the world.

Sales and net income have grown by an annual average of 11 percent and 18 percent, respectively, over the past five years, and the company is aiming for its revenue to be roughly 40 percent higher by 2017.

What’s driving this growth? Brand and distribution power, along with growing demand as the world’s middle class expands. The company’s efforts to increase online and international distribution are adding significant sources of profitable business, in places where demand is likely to grow briskly. VF is also growing its 1,400-some store count aggressively, to sell directly to consumers.

VF stock recently offered a 1.7 percent dividend yield, and its dividend has increased by 20 percent in each of the past three years, with management intending to increase it regularly in line with earnings-per-share growth.

The stock has averaged annual gains of 15.7 percent over the past 20 years, and it has gained more than 25 percent over the past year. It’s true that it’s not at bargain-basement levels right now, but it might still serve long-term investors very well, and at least deserves a berth on your watch list.

Ask the Fool

Q: What is FDIC insurance? – W.K., Loxahatchee, Florida

A: The Federal Deposit Insurance Corp. (FDIC) was created during the Great Depression to protect investors against bank failures. It insures checking, savings and money market accounts (and CDs) for at least $250,000 per depositor at each bank and thrift.

It doesn’t cover stocks, bonds, mutual funds, life insurance policies, annuities and the like, though. For these, check with your financial service company to see what kind of protections may be provided.

Learn more about the FDIC at fdic.gov, and more about your short-term savings options at sites such as bankrate.com. (You do have an emergency fund with three to nine months of expenses socked away in short-term savings, right?)

My smartest investment

Many years ago, I inherited a few shares of Squibb, a pharmaceutical company, and over time it split several times and grew greatly in value, merging with Bristol-Myers along the way. But at one point, in 2002, it slid sharply over a few months and stayed depressed for quite a while. I was vexed by my trust officer, who didn’t alert me to the beginning of the slide, and I didn’t know whether to sell some or all. It turned out well, but I was unhappy at the time. – A reader, Lexington, Kentucky

The Fool responds: Many great stocks tumble sharply on occasion. You shouldn’t think immediately of selling, though. Instead, find out what’s going on and re-evaluate. Do you still believe in the company’s long-term prospects? Then consider hanging on.

In this case, Bristol-Myers Squibb’s earnings were suffering due to a temporary buildup of inventory, and a major drug was facing expiration of its patent protection. What would have mattered a lot then was its pipeline of new drugs, as they represent future earnings. The stock has more than quadrupled since that downfall, rewarding believers.