Coach is a retail survivor. If you purchased Coach in April, you're up an enormous 64%. Not bad, for the worst U.S. recession in more than a generation.I'm Reiterating my Buy rating for Coach (NYSE: COH), first recommended on April 13, 2009 at a price of $18.22.
Most investors are aware that given the era of the 'frugal consumer' that's driven by stagnant real incomes, difficult labor market conditions, and an uncertain economic recovery timetable, the retail sector is best avoided.
But Coach, a leading designer and marketer of high-quality accessories, is an exception, due to its lucrative niche: 'accessible' luxury.
Look for Coach to register impressive sales and earnings gains, while other retailers languish. Emerging market opportunities and impressive per employee productivity adds to the positive story. But don't wait until COH has been bid-up to the mid-$40s amid the economic expansion: it's now or never with COH. The First Call FY2009/FY2010 EPS estimates for COH are $1.89 to $2.04.
Stock Analysis: Coach is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in COH now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your COH position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $8.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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