The Estee Lauder Companies Inc. is one of the world's leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products. The Company's products are sold in over 130 countries and territories under well-recognized brand names, including Estee Lauder, Clinique, Aramis, Prescriptives, Origins, M--A--C, Bobbi Brown, Tommy Hilfiger, La Mer, jane, Donna Karan, Aveda, Stila, Jo Malone, Bumble and bumble, kate spade beauty, Darphin, Michael Kors and Rodan & Fields.
[Source: Company Press Release]
Reasons to Invest:
This week's Drip of the week is worth a double take. Over the
past year this stock has been making more than one head turn as
it has been trending upwards, stopping occasionally so that
traders could seek profits, and then continuing on it bullish leg
After a rummage of very profitable prospects I have come to
choose Estee Lauder Companies Inc. (NYSE:EL) as this week's Drip
of the Week.
A Look at the Figures
Over the past quarter, EL's net sales jumped 9 percent to $1.35
billion. The company's net income applicable to common rose 14
percent to $77 million. The company reported that these figures
reflect growth in all product categories and geographic regions
fueled by new product launches and improved margins.
Keeping that in mind, I wouldn't mind adding a company that
generates sales in the billions and that has seen growth in every
single one of its products in every region that its products are
sold in. To me this equals one beautiful investment. However, I
know that figures can be deceiving - yet, one look at the charts
and I am sold.
EL has trended lower for the past three days, and in my opinion
this is largely due to profit taking after the stock hit a new
52-week high of 40.20. The stock has been surfing through its
regression channel with ease and if this trend continues I could
see EL hitting 50 by the end of next year. A quick once over on
the stochastics indicator and I noticed that EL was recently in
overbought territory, but is now resting nearly 20 points below
it. This generally means that there is less risk to enter the
stock than there is when the stock is in an overbought range.
The daily chart shows that the simple 10-DMA just broke over its
20-DMA a week or so ago, and this also indicates a buy signal.
The weekly chart also looks attractive with the 10-DMA resting
above the 20-DMA. The MACD just produced a fresh buy signal and
the stock is coasting through its regression channel with
relatively no signs of setbacks. The Stochastics indicator says
the stock is a few points over overbought territory, however this
was the case from March to August of this year and in this time
period the stock gained close to ten points.
The monthly chart looks the same as the weekly. The only
significant difference that I see is that the stock entered the
overbought range in July and is still in overbought territory
even today. In this time period the stock has gained more than 8
With that said, I suppose I would pay no attention to the
stochastics indicator as EL has been overbought for most of the
year. The reason I would discard this indicator is because most
of the stocks in the major markets have been overbought since
their rebounds off of March lows and a great majority of them
have not looked back since. What I do like to see is that the
10-DMA is resting over the 20-DMA on the monthly, weekly, and
daily charts. The MACD is giving off a buy signal on all three
charts and EL has been on a bullish rampage higher since the
beginning of the year.
EL just increased its annual dividend from $0.20 to $0.30, which
comes out to a 0.77 percent dividend yield. While this is by far
one of the lowest yearly dividend paying Drips that I have
spotlighted, I am still intrigued by its bullish performance and
am excited to see that the company is forecasting a 3.30 percent
dividend growth rate over the next five years. The dividend date
for EL is set for January 6th, 2004.
This ends another exciting episode of the DripAdvisor.com Drip of
the Week. Stay tuned next week, as we will spotlight another
stock worthy of the DripAdvisor.com limelight.
Until Next Week,
Strong Buy 2
Strong Sell 0
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