Valentine’s day is upon us – bringing hope to every romantic while sparking gift anxiety into everyone else. Once again, the challenge of finding the perfect gift to capture the essence of each particular relationship. To some that may mean a Hallmark card; to others, the sky’s the limit. Gold, diamonds, jewelry of all sorts, candy and fragrances all express that romantic “Be My Valentine” feeling. What about a gift of stock? Not very romantic, but for the practical, diet conscious or investment-oriented loved one, this might be the perfect solution.
Two Februaries past, this column reviewed several Valentine stock choices. Let’s see how the lucky recipients fared and whether the investments have lasted longer than the candy and flowers.
All Valentine categories but candy can be found at Tiffany’s (TIF), our first pick in 2006, making this stock a well rounded February 14th gift choice. Tiffany’s is an icon, a high end Manhattan jewelry store made famous by Audrey Hepburn, epitomizing mid-century glamour. Today, TIF has grown from its landmark 5th Avenue store to a jewelry conglomerate, with 167 boutiques throughout the United States. Its legendary blue and white mail order catalog, business to business and internet sales stretch world-wide. While the stock certificate didn’t arrive in the signature white ribbon tied blue box, its value has grown more than anything that did. Now selling at approximately $46 per share, $6 above its selling price two years ago, Tiffany’s shares have enjoyed an annualized gain of roughly 7.5% plus 1.3% in dividends.
We also suggested shares of Hershey (HSY) -the Pennsylvania chocolate company - as a sweet alternative to candy. On balance, though, the idea seemed to melt down a bit over our two year time frame. Now selling at $40 per share, Hershey is down 13.6% annualized each year from $55 two years ago; a bittersweet present. The 2.5% yearly dividend was the only sugar in this gift.
For those who prefer their gold in a vault rather than their jewelry box, the inverse relationship with dollar value has sent gold soaring. Seen as a hedge against inflation, conservative investors find this somewhat volatile commodity a comforting choice. Gold prices rose to a 25-year high of $541 per ounce in 2005, so our expectations were moderate when we recommended it as a gift in February 2006. While it may have seemed pricey at the time, gold never looked back and has climbed to over $850 an ounce by year-end 2007. This annualized increase of 28.6% makes gold the shiniest gift of all.
Besides bullion or coins, the most common means of participating in gold is ownership of shares of gold producing companies or shares of mutual funds holding gold and precious metal producing companies. Individual company examples include Newmont Mining (NEM) in Denver, CO Anglogold Ashanti ADRs (AU) Johannesburg, South Africa and American Barrick (ABX) located in Toronto, Canada. Nearly every mutual fund family has a gold or precious metals fund, or an index fund that will track the performance of the sector as a whole. All that’s gold didn’t glitter, though; individual gold mining companies share prices actually fell approximately 7% yearly over the last two Valentine’s days - primarily a result of higher energy and production costs and falling margins. The AMEX Gold Bugs Index, (HUI) a precious metals index fund offering wide diversification and an adorable name, would surely have pleased every romantic. An increase in value from $277 to $414 in the same two year period resulted in an annualized gain of 24.7%.
Whatever you choose, we hope the choice is successful in the eyes of your Valentine, regardless of the performance statistics. Because, in Elizabeth Barrett Browning’s words…
“…I lo ve thee with the breath, Smiles, tears, of all my life!” … and a love this precious and strong deserves a really good gift!
Steven Weber and Elizabeth Loda, CFP, are senior investment advisors for The Bedminster Group, providing investment, estate, financial planning and brokerage services. The information contained herein was obtained from sources considered reliable. Their accuracy cannot be guaranteed. The opinions expressed are solely those of the author and do not necessarily reflect those from any other source. Mutual funds are sold by prospectus only; the discussion of securities in this article should not be construed as a recommendation or solicitation to purchase.