TUB Snippets 1: Tapestry Inc (TPR)

Prior to talking about <Company 6>. I decided to start a new series on this blog called “TUB Snippets”. It will be a short and simple analysis that I did on companies I had looked at.

As I revealed in my post on my portfolio, I have a 3rd portfolio for active trading and also many small positions in the 3 portfolios (25% of the combined portfolio in 17 companies).

I realize as the economy move forward, there are many long term opportunities as well as short term opportunities. Thus, I will do small pockets of fast trading/short term trading (3 to 6 months) to take advantage of possible short term positive effects.

Short term opportunities come from news or sudden mispricing, due to misreading of financials, or short-term economic shift – such as the energy crisis now, inflation crisis and the upcoming festive season.

1 of the opportunities was Waitr Holdings Inc (WTRH).

Screenshot from Finviz

To keep the story short, the company intend to change the business model from solely delivery to an eco payment system for its partners through a series of acquisition (CEO very rude in the last transcript). Then one of the analyst did the below in Aug 21:

Screenshot from Seeking alpha

After the company falls to US$0.80+, it was revealed that Morgan Stanley had a 10% stake and the price rockets to about US$1.35. That's when I sold the whole position.

Screenshot from Seeking alpha

So today, I will be revealing a VESTED short term position I have – The company is Tapestry (TPR).

For those that followed me on my Fundamental Scorecard Telegram Group and InvestingNote, you will understand now why I put up these polls lately.

Screenshot of Fundamental Scorecard Telegram Group

Screenshot of InvestingNote

It was to find out the CURRENT popularity/sales of Coach and Kate Spade handbags/products – which Tapestry owns. Basically, from the small number of votes, we can still conclude there is still brand value among these 2 brands.

So why TPR?

  • Compare against Burberry, Capri, Prada – it has the lowest valuation in terms of ratios.
  • Significant increase in revenue recently, the share price should not have been down trending.
  • With the amount of excess cash in the market and festive season coming along and economy opening up, I believe consumer goods will benefit.
  • If you look at Facebook now, many people are doing Facebook live to sell overseas branded goods during to the lack of travelling overseas. So I foresee another channel for the revenue to rise.
  • Even my wife, whom haven’t been buying branded stuff for some time, got influence by these Facebook Live event and bought a coach wallet and a coach bag.
  • In the next 2 quarters I foresee a better revenue figure. 

Screenshot of Fundamental Scorecard Website

Do note that this is a short term position. Thus, instead of the regular factors, I will still compare the company against the competitors, look for short term catalysts (which was already listed) and ensure that the company will survive/not go busted (using the Fundamental Scorecard above).

As per the company’s fundamental scorecard, the balance sheet seems neutral and the FCF has improved significantly in the last year. This will have provided some comfortability for me to invest in the company.

With that, this is the summary:

  • Lowest valuation among selected competitors
  • Festive Season/Revenge Shopping/Excessive Liquidity/Economy Opening Up/Facebook Live
  • Higher Revenue in the next 2 quarters (upcoming Nov Results and next Feb/Mar Results)
  • Sustainable Balance Sheet with recovery in Revenue/Net profit/FCF
  • Holding period - Estimated about 3 to 6 months/till breakout.

This is the first company under the “TUB Snippets” and I hope you like this series.

If you have a company you will like me to look into, do comment on the post/platform. I will try my best to do it.

If you are interested, please do bookmark this Blog or follow me on TUBInvesting FB, or Fundamental Scorecard Telegram Group (please google for the links!).

Stay tune for my next post!