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For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"My conservative choice for 2008 is The Men's Wearhouse Inc. (NYSE: MW), one of the largest specialty retailers of men's suits," says value investor Charles Mizrahi, editor of Hidden Values Alert.
"Men's Wearhouse stores offer a broad selection of designer, brand-name and private label merchandise at prices 20% to 30% below the regular prices found at traditional department and specialty stores.
"The firm's US operations include 636 retail apparel stores. The brand targets middle- and upper-middle-income men by offering quality merchandise at everyday low prices. In addition to value, the company believes it provides a superior level of customer service.
"The shares outstanding have decreased by 10% over the past five years. In addition, long-term debt/equity is only 9% and it has $135 million in cash and short-term investments on its balance sheet (as of August 7, 2007).
"Net profit margin has doubled over the past five years to 7.2%. And, for the past three years, return on equity has been over 18% -- up sharply from 10% in 2003. Meanwhile, in the past five years, store count has doubled to 1,269 as of August 7, 2007.
"Overall, MW is a well-run business, and a price of $41.50 or less per share represents very good value. If MW can grow earnings at only 13% per annum (which is 70% lower than its five-year average) and maintain a P/E of 12, the stock will handsomely reward investors through the next five years."
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