Lost Its Luster
By Stephanie D. Smith

(MONEY Magazine) – Japan's economy has been experiencing a stealth recovery. While GDP has been growing steadily, retail sales have yet to follow, though history suggests that Japanese consumers should start to open their wallets. If that happens, jewelry retailer Tiffany (TIF) could benefit. One quarter of the company's sales come from Japan, and Rose Papp, who co-manages the Pioneer Papp America-Pacific Rim fund, thinks that portion of the business will rebound. "Those improved GDP numbers should trickle down to retail spending in the second half of this year," she says. Shares are down 24% from a 52-week high of $49 last November. At $38, the stock trades for roughly 20 times 2005 earnings, less than its five-year average of 29. --S.D.S.