Some of the best stocks fly under the radar of most investors. V.F. Corp. (NYSE: VFC), with an eminently forgettable name, is one such company. It’s the force behind top brands including The North Face, Vans, Timberland, SmartWool, Wrangler, Lee, Reef, Nautica, Jansport, Eastpak and a host of licensed product arrangements.
The company not only sells products through its own proprietary stores, but also serves as a wholesaler for other retail businesses, such as department stores, specialty stores and mass merchants.
V.F. recently divested three non-core brands (7 for All Mankind, Ella Moss and Splendid) for $120 million, and could soon sell its licensed sports group. These moves should boost its cash flow and bolster its profit margins.
V.F. has put together a strong track record of performance, with average annual returns of nearly 12 percent over the past 30 years. Yet retail weakness in recent years has hurt V.F.’s share price, presenting an attractive opportunity for long-term investors to jump in.
V.F. has also boosted its dividend for 44 straight years, including an impressive 14 percent increase announced this year that boosted its quarterly payout to $0.42 per share and its dividend to a recent yield of 3 percent. With improving prospects for the retail industry as the holiday season is underway, the apparel maker is in a good position to start delivering better total returns to shareholders in 2017 and beyond.
Ask the Fool
Q: Can you explain how a stock can start trading in the morning at more than its previous closing price? I placed a buy order for a stock before the market opened. The stock had closed at $55 the previous day, so I bid that. But it opened at $58. What’s the deal? - A.S., Grand Rapids, Michigan
A: If there’s good news released about a stock, demand for it can build up, especially overnight. Buyers will be willing to pay more for it, so sellers will sell it for more. A stock’s price reflects the last price at which someone was willing to buy it and someone was willing to sell it.
Q: I’m new to the game of investing and have made some money in penny stocks. Do you recommend any low-priced stocks? - P.N., Batavia, New York
A: Investing shouldn’t be a game, as it involves your hard-won dollars and your financial future. (It can still be fun and thrilling, though.) You’re very lucky if you haven’t yet lost a lot of money in penny stocks. They’re notoriously risky and have cost many people many dollars.
Many naive investors assume that if they don’t have a lot of money, they should focus on stocks with low prices. That’s not the case. Yes, you can buy 200 shares of a $3 stock for just $600. But it stands a good chance of becoming a $2 or $1 stock. Instead, you could just buy 30 shares of a healthy and growing company’s $20 stock or 3 shares of a $200 stock.
Learn more about investing at fool.com/how-to-invest/index.aspx. To see a long list of stocks we have recommended, try our Motley Fool Stock Advisor newsletter for free at fool.com/shop/newsletters.
My Dumbest Investment
A Small Madoff
My dumbest investment decision was to take advice from a family member who was trying to get anyone with money into his no-lose investments - stocks, gold, etc. Luckily, over time I likely broke even. He is now in jail. It turned out he eventually got into cons similar to those of Bernie Madoff, but on a smaller scale.
I was fortunate that my naivete didn’t bankrupt me, as his scheming did to so many others. Do your own due diligence. Pick a diverse set of proven winners based on evidence of integrity, and stay with them. We own our decisions. - S.Y., Chicago
The Fool responds: You were lucky indeed. Ponzi schemers such as Bernie Madoff lure naive investors with promises that are too good to be true, such as that you’ll never lose money or will earn a certain guaranteed return in stocks. There are savvy investors and financial advisers out there who can steer you into good investments, but there are also well-meaning friends who don’t know as much as they should - as well as advisers with conflicts of interest, and outright scam artists looking for naive people.
Carefully vet any adviser. You can learn how here: guidevine.com/newsroom/how-to-conduct-due-diligence-on-a-financial-advisor. Or consider taking control of your own money. Investing isn’t rocket science. You can do well over the long run simply by sticking with inexpensive broad-market index funds, such as ones based on the S&P 500.
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