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Is 'Long on Women' Wrong on Women?

Here's a tip from Bank of America Merrill Lynch Global Research: Go "long on women." Because "more women with more money are doing more shopping," the bank says in a note to investors, stocks of companies that cater to women are likely to be strong performers. David Bianco, head of U.S. equity strategy research for Merrill, expands on the idea:

"Women may increasingly become the higher-income earners of U.S. households, and since they make the bulk of household spending decisions as it is, we think their stronger purchasing power relative to men bodes well for spending on a wide range of categories from vacations to cosmetic procedures to home furnishings."
Potential beneficiaries of the "long-on-women" theme that Merrill cites include specialty retailers like Ann Taylor (ANN), Express (EXPR), Coach (COH), Tiffany (TIF), Urban Outfitters (URBN) and Gap (GPS). They also like health care companies such as Medicis Pharmaceutical (MRX) and Allergan (AGN), a producer of Botox and breast implants.

Other prospects include Aptar Group (ATR), a packaging company with dispensing systems for fragrances and cosmetics; Liberty Media (LSTZA), which owns the QVC shopping network; Walt Disney (DIS), whose theme parks are popular with moms and their kids; the vintner Constellation Brands (STZ) and American Express (AXP). I'm sure this is not what Merrill's strategists intended, but this "long-on-women" notion seems anachronistic and patronizing, as if watching DVDs of "Mad Men" played a big part in their research. If I were a woman reading this list of suggested stocks, I might feel insulted. Companies that make Botox, breast implants, booze and clothes, and the owner of a home shopping channel? Really? It's unclear why Merrill finds this such a big idea now. It has been a good 40 years since society figured out that women have come a long way, baby. They already make up a substantial proportion of the workforce and earn good money.
The note makes the case that some of the occupations for which demand will be greatest in coming years, such as nursing, are dominated by women. While that may affect spending by women at the margin, it would hardly be the makings of a radical shift in consumer spending patterns. General trends in economic growth and consumer spending, by people of either gender, are bound to have a much greater impact on these stocks.

There may be sound reasons for owning some of the names on Merrill's list; Disney and American Express, for instance, are solid blue chips with strong, consistent earnings growth and reasonable valuations. As for the "Long on Women" theme, prospective shareholders should make sure that these companies have more going for them than the chance to benefit from descendants of Wilma and Betty and Lucy and Ethel racing to the mall or a plastic surgeon with their charge cards.

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