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Romance Your Valentine With These Sweet Stock Buys

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Sunday, Feb. 10 2008

NEW YORK — The staple offerings of Valentine gifts are on display everywhere: from crimson teddy bears at your neighborhood drugstore to the velvety fare of Godiva’s chocolates to the cool, robin-egg hued sparkle of Tiffany’s. Add to that the perennial appeal of a dozen overpriced long-stem roses and you’re forgiven if finding a present for your partner reminds you of a multiple choice test.

But love comes in more ways than red, sweet and sparkle. If you’re looking for a unique gift idea for your Valentine this year, it may be worth remembering that the two of you are joined not just by your hearts but by your wallets. For some, there’s nothing that says “I love you” like a stock certificate putting your spouse’s favorite jewelry or lingerie brand in her hands.

“We have everything, we’ve given each other everything, and we’ve reached a point where we rack our brains every time Valentine’s Day comes around,” said Lee Comer, a retired owner of a marketing agency in Toledo, Ohio. He has been giving his wife stock of Saks (SKS) and Tiffany & Co. (TIF) every February 14 for the last 25 years. This year, he is showing his love with 100 shares of Saks.

“The first time I did it, she didn’t know what to think. Then she started really looking forward to it,” Comer said, explaining that he chose those two companies because his wife loves shopping at those stores. To him, giving a stock certificate to your spouse can be no less romantic than surprising him or her with a thoughtful present, especially if the shares are of a brand he or she particularly likes.

Though it does take some getting used to, the idea of pampering your partner with shares instead of a shiny diamond is hardly new. It is a fairly popular gift that can be very intriguing, according to Alan Lancz of Alan B. Lancz & Associates, a money management firm.

“Companies like Tiffany and Limited Brands make for a great Valentine’s gift because of their growth potential,” says Lancz. “They are divesting less efficient operations, so if you’re looking at it from a longterm perspective, say two to three years, you might want to pursue that idea.”

Sweetheart stocks to love

In his annual look at public companies whose earnings typically get a boost from the sentiments surrounding Valentine’s Day, Brent Wilsey of Wilsey Asset Management in Poway, Calif., a Linsco/Private Ledger Corp. affiliate, says the following three companies will melt your lover’s heart but not your brokerage account:

FTD Group Inc. (FTD) Growth looks good for this company. Investors will enjoy a 5.1% dividend and revel in the knowledge that the floral product provider uses only half its earnings to pay out the juicy yield. Return on equity looks good at 15% and the company’s sales seem to be on track, increasing 19% year-over-year. Steiner Leisure. (STNR) This spa service provider has experienced good growth of sales and earnings, which are up 15% and 11% respectively, both well above the industry average. 2007 earnings per share are estimated by Wilsey at $2.64, and 2008 EPS is expected to jump to $2.99.

The Nassau, Bahamas-based company, which has 53 resort spas and two day spas as well as a presence on 126 cruise ships, carries no debt on the balance sheet and has returned 27% on equity over the previous 12 months. Limited Brands. (LTD) The parent of the Victoria’s Secret line is poised for growth, with return on equity at 33% compared with the industry average of 23%. The company pays a healthy dividend of 3.2% using only 30% of its earnings and its stock trades around 10 times current earnings. However, Wilsey cautions, with debt-to-equity at 140%, debt could be a problem, so watch it closely. While these stocks could benefit anyone’s portfolio, when bought expressly as a Valentine’s gift they are more likely to end up in women’s hands.

Wonder what to buy your guy? Wilsey says shares of Best Buy (BBY) and Coach (COH) are both appropriate. “Being romanced by public companies that profit from our affection for one another is easy, and these stocks certainly don’t play hard to get,” he notes.

However, he cautions investors should not presume that all romance-inducing stocks are winners and stay away from plunging money into Blue Nile (NILE) , Hershey (HSY) and 1-800-FLOWERS (FLWS) .

Copyright © 2008 MarketWatch, Inc.