Polo Ralph Lauren Corporation (NYSE: RL) is engaged in the design, marketing, and distribution of apparel, accessories, home furnishings and fragrances. These are offered under such brand names as Polo Ralph Lauren, Safari, Black Label, Club Monaco and Rugby. The company operates over 300 Ralph Lauren, Club Monaco, and Rugby retail stores, as well as a pair of e-commerce sites. Its products are also carried by upscale and mid-tier department stores. Macy's (NYSE: M) and Dillard's (NYSE: DDS) account for more than a third of all wholesale revenue. Jones Apparel Group (NYSE: JNY) and Liz Claiborne (NYSE: LIZ) are competitors.

The company pleased investors late last month, when it reported fiscal Q4 EPS of $1.00 and revenues of $1.24 billion. Analysts had been looking for 65 cents and $1.15 billion. Management also guided FY09 EPS to $3.95-$4.05 ($3.97 consensus). Needham subsequently reiterated its "buy" rating on the shares and boosted its price target to $79.

Determined to bring a more formal, stylish fashion to the U.S. Olympic team garb for the Beijing games later this year, the Olympic committee has dumped Roots Ltd. in favor of Polo Ralph Lauren Corp. (NYSE: RL). According to The Wall Street Journal [subscription], Tom Brokaw, former NBC news anchor, was asked by USOC COO Norman Bellingham to approach Ralph Lauren about the possible affiliation.

The deal, which also includes the Paralympics, builds on the company's growing affiliation with sports events, including the U.S. Open and Winbledon, and should result in a terrific boost to sales at both its own boutiques and other retailers with whom it is negotiating distribution.

The designs will supposedly evoke the styles of the film Chariots of Fire. The duds will be kept under wraps until the opening ceremonies in August, although the many Chinese who will probably sew the garments will have a good idea of what to expect. I'll be interested to see if the Chinese government's clampdown on counterfeit goods successfully keeps fake U.S. uniforms off of the streets of Beijing before the games even began.

The line of consumer clothing to be spun off the Olympic garb should dovetail nicely into Lauren's line and burnish its image, although it will be interesting to see at what price point this line will fall. The equalitarian nature of the Olympic sport may not be reflected in the cost of dressing like our champions.

MOST NOTEWORTHY: Cisco Systems, Virgin Mobile and Polo Ralph Lauren were today's noteworthy downgrades:

• JP Morgan downgraded shares of Cisco Systems Inc (NASDAQ: CSCO) to Neutral from Overweight following its Q2 results, as they believe the company's international exposure is not enough to offset slowing in North America and Europe. Shares were also downgraded to Neutral from Outperform at Baird, citing the meaningful slowdown in fundamentals.
• Lehman downgraded Virgin Mobile USA Inc (NYSE: VM) to Equal Weight from Overweight based on reduced visibility following its Q4 report.
• Polo Ralph Lauren Corporation (NYSE: RL) was lowered to Hold from Buy at Citigroup, as they believe the company is facing fundamental challenges in key markets and a lack of visibility on the Japanese market. They see more upsideelsewhere.

OTHER DOWNGRADES:

• Bear Stearns downgraded BT Group Plc (NYSE: BT) to Peer Perform from Outperform.
• Think Equity lowered Napster Inc (NASDAQ: NAPS) to Accumulate from Buy.
• UBS downgraded Elbit Systems Ltd (NASDAQ: ESLT) to Neutral from Buy.

Polo Ralph Lauren Corp. (NYSE: RL) shares are rising today after the apparel maker posted a fourth-quarter profit of $112.7 million, or $1.08 per share, helped by higher wholesale sales and a lower tax rate. Analysts had been expecting a profit of 77 cents per share. Wholesale sales rose 17% to $627 million. RL also raised its 2008 guidance this morning, a move that investors generally love. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on RL.

After hitting a one-year high of $102.58 in July, the stock hit a one-year low of $50.55 last month. RL opened this morning at $60.94. So far today the stock has hit a low of $60.11 and a high of $62.89. As of 10:45, RL is trading at $62.72, up $5.26 (9.2%). The chart for RL looks neutral and improving slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

Today's Wall Street Journal has an article about the cost-cutting measures going on retailer, JC Penney (NYSE: JCP). The article, essentially an interview with CEO and Chairman, Myron "Mike" Ullman III, details Ullman's changing of gears, from aggressive store expansion and online growth to scaling back in the face of a looming recession.

The CEO is expected to announce today plans to merge the buying and marketing operations for store and online sales, cutting as many as 200 jobs.

In the article, Ullman says he may scale back store expansion over the next two years.

Getting more of the consumer's wallet

Ullman says, "Half of the families in the U.S. shopped with us at least once last year. But we only get 7% of their spending. So, our biggest opportunity in the downturn is to make every visit they make to our store, Internet or catalog more productive by offering more innovation."

Luxury eyewear manufacturer and distributor Luxottica Group (NYSE: LUX) certainly has turned its eye towards profits. Despite the continuing erosion of the U.S. dollar against the Euro, Luxottica's July 26 2Q earnings report looks good. The only blind spot is Luxottica's inability to capitalize on its retail sector, particularly in the U.S. market. That is not to say Luxottica is not trying. The company has recently acquired 870 additional retail locations globally, and is aggressively establishing a retail presence in China and South Africa. In order to strengthen its brands in the U.S., Luxottica is unveiling a new line of eyewear products under a licensing agreement with Polo Ralph Lauren. Within the next several quarters, Luxottica intends to launch an ultra-luxury (obscenely overpriced?) eyewear brand named ILORI as part of a full luxury line. Perhaps the problem in its retail sector stems from Luxottica's inability to define precisely what type of eyewear distributor it is. While going after the vanity eyewear market of the uber-wealthy, Luxottica also owns LensCrafters and Sunglass Hut, the epitome of value-driven suburban mall retail demographics.

Despite problems in its retail sector, and being repreatedly hammered by exchange rate fluctuations, Luxottica continues to post good numbers. The company posted its ninth consecutive quarter of double-digit growth in its wholesale sector. In the most recent quarter, wholesale sales were up 17.5%. This gain follows 1Q 2007 wholesale gains of 20.4%. For the first half of 2007, wholesale sector operating income has increased 24.5%, which certainly helps to offset a 12% decline in retail operating income for the same period. Wholesale sales in emerging markets have increased by 50% during the previous quarter with so sign of a slowdown. On the basis of recent wholesale figures, Luxottica CEO Andrea Guerra raised FY guidance for growth in consolidated EPS to the 26-29% range, excluding the impact of exchange rate fluctuations, always a major concern to potential and current shareholders. For the first half of 2007, consolidated EPS stands at $0.83.

Luxottica stock is up over 15% from the beginning of the year, closing on 9 August at $35.50. Investors with a tolerance for currency volatility may wish to look into Luxottica.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that Wal-Mart Stores (NYSE: WMT) is helping to bring eBay Inc's (NASDAQ: EBAY) Skype "to the masses," by selling Skype Internet calling phone gear in the electronics section of its stores.
• The Wall Street Journal's "BreakingViews" section speculated that a merger between General Electric Company's (NYSE: GE) NBC and Yahoo Inc (NASDAQ: YHOO) would "make industrial sense."
• The Financial Times (subscription required) reported that the Bancroft family, which control a majority of the voting shares of Dow Jones and Company Inc (NYSE: DJ), is split over the idea of meeting with News Corporation (NYSE: NWS) Chairman Rupert Murdoch to discuss his $5B offer for Dow Jones.
• The Financial Times reported that Internet jewelry retailer Blue Nile Inc (NASDAQ: NILE) is launching operations in Europe.

OTHER PAPERS:

• According to the Sunday Telegraph, Rio Tinto (NYSE: RTP) has hired Morgan Stanley to help defend itself in the event of an unsolicited takeover approach.
• The Sunday Telegraph reported that Clear Channel Communications Inc (NYSE: CCU) is expected to put its international poster business up for sale for as much as $3.2B.
• The Telegraph reported that rival groups are looking to stop Alcoa Inc's (NYSE: AA) hostile bid for Canadian aluminum producer Alcan Inc (NYSE: AL).
• The Economic Times reported that Polo Ralph Lauren Corporation (NYSE: RL) is in talks with "leading Indian business houses including the Tatas," according to sources.
  

WEBSITES:

• DigiTimes.com reported that the ATI Radeon HD that was just introduced by Advanced Micro Devices Inc (NYSE: AMD) has fallen short of expectations in terms of price, performance and energy efficiency.

Stock screeners are tools that let investors filter through a large number of stocks according to chosen criteria. While helping investors pick stocks and narrow down options, it is important to remember that a stock screener is just a tool and every investment should be analyzed on its own merits to make sure it fits with your personal portfolio and risk characteristics. This is my weekly column that finds interesting investment opportunities with the help of our Stock Screener.

Update: I've written the post before the recent rumors reported in the New York Post about Barneys New York possibly being bought by Dubai oil sheiks. While I did mention that I've noticed increased activity in JNY trading, the reason was unclear. I now expanded further on the matter at the end of the post.

Last Friday was Good Friday and like every good Canadian who lives along the U.S. border, we decided we couldn't handle one day without shopping (stores in Canada were closed). So we drove to Buffalo. Bargain huntin'. With the low U.S. dollar, bargains are even better. We went to the outlet mall and, as usual, I got stuck at Jones New York, hubby at Liz Claiborne.

Last week I came across an article in Forbes about the possibility of Gianni Versace S.p.A. going public. Versace had recently announced it swung a profit in 2006 and that it plans to further expand in Asia. A Versace IPO could be worth $1.2 billion. A Wall Street Journal article mentioned that a few other private fashion houses might also consider public offering [subscription] next year, including Prada SpA.

Naturally, with all this in my head, I wanted to see how the U.S. fashion stores are doing. In the Stock Screener, I chose the Women's Clothing industry and a minimum $1 billion market capitalization. Lo and behold, the stock screener returned Liz Claiborne Inc. (NYSE: LIZ) and Jones Apparel Group Inc. (NYSE: JNY).

Socks and ties, cologne, a ticket to a ball game: all well and good, but for the stock-loving guy in your life, why not surprise him this year? Instead of giving him a gift that will wear out, run out or disappoint (for God's sake, don't give him Knicks tickets!), present him with something that will fit into his portfolio and remind him of you every time he counts his loot. Some suggestions:

Instead of cologne, a cologne maker. Polo Ralph Lauren Corp. (NYSE:RL) offers Polo, Polo Black and Polo Blue colognes for men at $30-40 a pop. For $83.52, you can buy him a share, so he makes money on every bottle sold. And this week Polo announced third quarter results eleven cents over forecast estimates.

Stocks instead of socks (or ties). J.C. Penney Company, Inc. (NYSE:JCP), the stalwart of middle American men's wardrobes, has shown impressive growth over the last three years. This week, it announced a same-store sales rise for January of 3.6%, which will warm any Wall Street fan's heart more than a pair of socks.

Think dollars instead of ducats. If you buy your honey tickets to a ball game, you run the risk of a half-time stomp out and a grumpy guy if his team tanks for the night. Suppose, instead, you bought him a share of The Walt Disney Company (NYSE:DIS). He would the be part owner of ESPN. That way, even on those nights when his team is struggling, he can enjoy the commercials knowing they're building his portfolio's value.

And that special thing you do that drives him wild? You know what I mean. Don't even think of trying to replace that with a stock.

Valentine's Day gifts for the market woman in your life -- Chocolate, champagne and diamond

The current Barron's features an article titled "Rich America, Poor America." It argues that we now live in an age of "plutonomy." Plutonomy is defined as "a global economy disproportionately propelled by the rich." This is the new economic, social and political reality that must be recognized in any investment strategy.

Many discussions about growing inequality in income and wealth in the US and in the world (and I think this inequality is real and undeniable, despite the Wall Street Journal's ongoing effort to argue otherwise) focus on the political and social aspects of this trend. This makes sense, since it is very much a political and social issue. But Barron's asks an interesting economic question -- what should you do as an investor, given this trend?

The simple answer is to invest in the company's that profit from serving the ultra-rich. Citigroup Inc. (NYSE: C) has put together a basket of stocks that tap into the luxury goods market. These include Coach (NYSE: COH), Polo Ralph Lauren (NYSE: RL), Tiffany (NYSE: TIF), LVMH (MC.France) and Porsche (POR3.Germany). These stocks have outperformed the market over the last few years. Ajay Kapur, a Citigroup analyst who focuses on these companies, thinks they will continue to outperform, since the growth of economic inequality is not likely to change anytime soon.

Of course, it may strike some people as strange if not immoral to worry about investing in the midst of such a troubling social development. The Barron's article provides some solid data on why we should be concerned about this. In particular, it provides recent data on the Gini Coefficient, a standard measure of inequality used by sociologists and economists who study the topic. The data clearly shows that the US is becoming more unequal. Equally disturbing is that fact that as far as economic inequality is concerned, the US is becoming less like other wealthy, democratic, industrial nations (Germany, Spain, Denmark, France, Sweden) and more like less developed, less democratic countries (Mexico, Hong Kong, Brazil, China). So you should make adjustments to your investment strategy, but if you find this growing gap between the rich and everyone else disturbing, you may want to consider working for political change too.

MOST NOTEWORTHY: Applebee's (APPB) and SLM Corp (SLM) topped today's noteworthy initiations list.

• Citigroup believes Applebee's International Inc. (NASDAQ:APPB) valuation reflects the company's turnaround potential and initiated the food retailer with a Hold rating and $25 target.
• SLM Corp. (NYSE:SLM) was assumed with a Neutral rating at JP Morgan; despite the company's strong outlook, SLM Corp expects political uncertainty, declining return-on-equity and their credit profile to limit valuation upside.

OTHER INITIATIONS:

• Cheesecake Factory Inc. (NASDAQ:CAKE) was initiated with a Buy rating at FTM Midwest, explaining that the food retailer is the "best upscale casual dining chain" with few competitors.
• Polo Ralph Lauren Inc. (NYSE:RL) was initiated with a Buy rating and an $87 target at W.R. Hambrecht, and they are positive on Polo's strength in the retail channel and international penetration.
• Buckingham Research initiated Burger King Holdings, Inc. (NYSE:BKC) with an Accumulate rating and $24 target.
• UBS is positive on Zion Bancorp's (NASDAQ:ZION) attractive footprint and business model, and started the banker with a Buy rating and $94 target.
• JP Morgan started Barnes & Noble Inc. (NYSE:BKS) with an Overweight rating, citing positive fundamentals and valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

I recently took a broad, comprehensive look at companies with market caps over $1 billion. My review included analyzing future cash flow, price-to-sales ratios, earnings forecasts and stock appreciation over the last five years.

Based on these measures, I've identified fifteen large cap companies that I think are the most overvalued in terms of their current stock prices. Below is the list, including links for more detailed analysis:

JC Penney (NYSE:JCP). The stock of this iconic American discounter has nearly doubled in the past two years. But sales remain mediocre and lately the stock has started to waffle.

Schlumberger Limited (NYSE:SLB). Its stock is up 200% over the past five years while customer ExxonMobil Corporation (NYSE: XOM) is up only 100%. It has done very well, but it is in a cyclical industry that is pegged to oil prices and it' run may not last forever.

Merck & Co (NYSE:MRK). This once down-trodden name now trades near its 52-week high. But the drugs that represent 50% of its revenues go "off patent" soon. And Merck still faces major Vioxx liabilities.

AT&T (NYSE:T). This stock is at a four-year high at the same time that the competitive threat from cable only grows more fierce. Consumers are getting used to the idea of buying phone service from their cable companies and suddenly VoIP isn't so scary anymore. That spells trouble for AT&T.