Time to 'watch' Fossil (FOSL)

"Fossil (NASDAQ: FOSL), a global firm specializing in consumer fashion accessories such as watches, is our latest featured buy," says Charles Mizrahi in Hidden Values Alert.

"Fossil’s products are distributed globally at varying price points to service the needs of customers, whether they are value conscious or luxury oriented.

"Its broad-based wholesale customer base includes retailers such as Neiman Marcus, Nordstrom, Macy’s, Dillard’s, JCPenney, Kohl’s, Sears, Wal-Mart, and Target.

"It sells its products in the US through a network of company-owned stores, which includes 125 retail stores located in premier retail sites and 74 outlet stores located in major outlet malls.

"FOSL has total debt of $10 million on shareholder equity of $880 million. The company has decreased the amount of outstanding shares via buybacks, from $71 million in 2004 to $66 million in the latest fiscal year.

"FOSL has a strong balance sheet, with $178 million in cash. Free cash flow is currently $45 million. Fossil is a well-run business, and a price of $19 or lower per share represents a very good value.

"If it can grow earnings at only 9% per annum and maintain a P/E of 11, the stock will handsomely reward investors during the next five years."
 

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