One source for investment ideas that investors underutilize is their spouse or significant other.
Consider Peter Lynch's multifold return on Hanes Company - now Hanesbrands (HBI)
back in the 1970s, which he researched and bought after his wife declared her love of L'eggs, the company's popular pantyhose line sold in supermarkets and drugstores across America and packaged in whimsical egg-shaped containers.
As for me, my wonderful wife gave me two ideas on a silver platter over the past two years that I was too blind (or too ignorant) to investigate further. She uses Bare Escentuals
cosmetics and enjoys shopping for apparel at J.Crew
, and both of these companies were bought out at hefty premiums.
My wife is a big fan of Panera Bread (PNRA)
and has been going there for years, back when shares were in the $40s -- they now trade for $150.
When I was doing my initial due diligence on J.C. Penney (JCP)
after activist Bill Ackman took control and named retailing genius Ron Johnson CEO, I repeatedly asked my wife what she thought of the company. She said that she prefers Target (TGT)
. At the time shares were trading for $32, and today they trade for $19.
What does she like now?
Aside from the perennial favorite Target, she's a big fan of The TJX Companies (TJX)
, which has been a winner throughout the recession. Shares also trade at a decent valuation as opposed to Panera.
Last week, she discovered a very nice piece of furniture at Tuesday Morning (TUES)
. When I asked her about the company, she said that it's a retailer worth following based on its ability to pique shoppers' curiosity with an interesting and ever-changing inventory of well-respected brand names. Tuesday Morning is a small-cap stock with no debt and a nice chunk of cash. Shares trade at 85% of book value and activist investment firm Becker Drapkin Management, which has had tremendous success with turning around retailers, was recently granted a board seat (with possibly more to come) at the company.
For future investment ideas, I plan to give serious attention to any company or stock with which my wife becomes enamored.
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