Brokers' view: Midas

Tod’s S.P.A. is a luxury retailer of shoes and other leather apparel goods and accessories based in Italy.  Its brand names include Tod’s, Hogan, Fay and Roger Vivier. A compound earnings growth rate of 15.4 per cent per annum over the past five years is being boosted by store expansion in Asia and acceleration in sales, especially in Hong Kong and mainland China. 

The company’s valuation continues to look very attractive, trading on a 2012 EV/EBITDA of 7.7x, compared with the sector average of 10.2x. We continue to see the company as a potential bid target amid consolidation in the luxury sector. 

The stock has been hit hard recently for being Milan-listed so we would use this opportunity to pick up this global champion.

Time to look at Swatch
Swatch Group is a multi-brand watch and jewellery manufacturer based in Switzerland. It has an impressive track record, with a compound earnings growth rate of 11.7 per cent per annum over the past five years and top-line growth in excess of 24 per cent for 3Q11. 

Trading on a prospective multiple for 2012 of EV/EBITDA of 7.4 times, and a forward p/e multiple of 13.8, the company looks very attractive – especially given the potential for further growth in emerging markets and continued robust sales from its developed markets.