Lastly, if you want to be more consumer-oriented in your precious metal investments, there are many publically owned companies that sell jewelry, across a wide segment of consumer tastes and income levels. At the high end is Tiffany ( TIF), which designs, manufactures and sells jewelry of all sorts, including gold, silver, platinum, diamonds and other semi-precious stones. Tiffany is expected to grow earnings by approximately 30% in its current year and about 14% next year. The stock sells for approximately 16 times earnings, has an excellent balance sheet and is located in some of the finest shopping districts and centers of the world. On the low end of jewelry retail, you have Wal-Mart ( WMT), which is one of the largest jewelry retailers in the U.S, but it derives only a small percentage of its total revenue and earnings from the jewelry business. Also on the low end are the mall-based jewelers. You can often find three or four jewelry stores in a single mall intersection, which I call Jewelry Crossing. These often include Zales ( ZLC), as wells as competitors Kay Jewelers, Jared Galleria and Littman Jewelers. Jay and Jared are owned by Signet Jewelers ( SIG), and Littman is owned by Kroger ( KR), which is primarily a supermarket and department store operator.
In general, I would stay away from the low-end retail jewelers. Zales is an endangered company and could find itself in bankruptcy in the not too distant future. Signet, a better operator than Zales, earned $1.92 a share last year and 60 cents a share in the first quarter of this year. First-quarter same-store sales rose 5.8%. Signet is worth watching, but I would not act until we see its second-quarter results, which the company plans to report this month. -- Written by Scott Rothbort in Bolton Landing, N.Y..