Limited Brands (LTD)

The recent sale of the Limited Brands' apparel division (The Limited and Express) has disposed of the company's weakest-performing assets. This will likely unburden the company and also complete LTD's transformation from an apparel-based company to an intimates and personal care-focused company, market sectors with much less volatility (and where Limited has much more brand-based clout) than the ever-unpredictable apparel industry.

The stock is excellent at its price and trend well seasonally before Valentine's Day and Christmas, now that its rid of Limited, Limited Too, and Express. Increased profitability in the future. Hold a long position in growth, rather than income investing, or speculate during mushy holidays and you should be pleased. Personally, I'd rather take the long.

For quarter 3 of FY2010, LTD reported a 10% increase in comparable store sales while net sales increased 11.6% from the same period of last year. This is largely attributable to strong bra sales for the Victoria's Secret brand during early holiday shopping and the reintroduction of Miraculous bras. The company also reported a high conversion rate of store visitation to purchases. These strong sales could be related to a recovery in high-end retail spending. This, in addition to an increase in store revenue per square foot for Victoria's Secret, could lead to positive results for quarter 4 and the year. This is also based on consistency of earnings, especially in how LTD has beaten earnings expectations over the past four quarters by at least 3.10% and up to 31.6% each time.

With LTD's Victoria's Secret brand dominating over 25% of the market, LTD can see a stable cash inflow from that brand regardless of economic climate.

New acquisitions and concepts such as La Senza, Pink, and C.O. Bigelow have the potential to be developed into much bigger enterprises, which would help Limited Brands' performance as its two biggest brands (Victoria's Secret and Bath & Body Works) reach maturity.