Online diamond company Blue Nile (NASDAQ: NILE) is the largest online retailer of certified diamonds and fine jewelry, and part of the reason it attained that status is the company's philosophy: Blue Nile believes choosing the right engagement ring doesn't have to be complicated.
The company's web site is a pillar on which the NILE foundation stands: its structured so that the typical person can navigate carat / cut / clarity / color characteristics of diamonds and ring characteristics with relative ease. A 30-day return policy puts the potential purchaser at ease.
An argument can be made that NILE's shares got well ahead of the company when the stock spiked through $100 earlier this year, but the sense here is that the selling has been overdone with NILE trading in the $70 range. Further, if Blue Nile exceeds Wall Street's holiday sales expectations, NILE's shares should become very popular again. The Reuters F2007/F2008 EPS consensus estimates for NILE are: $1.04/$1.32.
The risks? The U.S. economic slowdown would affect nearly all retailers. Further, the Q4 2007 shopping season - - a period when diamonds and other fine jewelry are purchased as gifts - - could see soft sales, as a result of U.S. consumers' concerns about the U.S. economy, and elevated energy prices.
The First Call mean rating for NILE is: Hold. [14 firms.] Mean 2008 target: $79.00. [high: $110, low: $60.]
Stock Analysis: Blue Nile is a moderate-risk stock not suitable for low-risk investors. More-conservative investors may wish to wait for a pull-back to about $60, but keep in mind that NILE may not pull-back to that level. Investors with an investment horizon longer than two years should be rewarded from NILE's shares. Sell / Stop Loss if you to purchase shares in this company: $44.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
The risks? The U.S. economic slowdown would affect nearly all retailers. Further, the Q4 2007 shopping season - - a period when diamonds and other fine jewelry are purchased as gifts - - could see soft sales, as a result of U.S. consumers' concerns about the U.S. economy, and elevated energy prices.
The First Call mean rating for NILE is: Hold. [14 firms.] Mean 2008 target: $79.00. [high: $110, low: $60.]
Stock Analysis: Blue Nile is a moderate-risk stock not suitable for low-risk investors. More-conservative investors may wish to wait for a pull-back to about $60, but keep in mind that NILE may not pull-back to that level. Investors with an investment horizon longer than two years should be rewarded from NILE's shares. Sell / Stop Loss if you to purchase shares in this company: $44.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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