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If you missed the first elevator up with premier accessories company Coach Inc. (COH), which I first wrote about on April 13, 2009 at a price of $18.22, don't worry: There's another elevator you can catch. Coach corrected to about $35 in July, and the stock even gives the appearance of a short-term double-top at/near $45, but that pattern is unlikely to stop COH from resuming its vector north.
Coach, a leading designer and marketer of high-quality accessories, is bucking the 'frugal consumer' trend in the U.S. via its lucrative niche: 'accessible luxury.'
Look for Coach to post 9-11% revenue growth in 2010. Handbag penetration is increasing, and expansions in the Japan and China markets will enhance global market share gains in the years ahead. Just as significant: Coach has prudently decreased prices on selected items; even so, margins remain impressive.
The First Call FY2010/FY2011 EPS estimates for COH are $2.25 to $2.55. Each EPS estimate looks about 5% low, according to my analysis.
Technically, Coach corrected more-than-expected this summer, but the uptrend remains intact, and the stock appears poised to rise back above the key, 50-day moving average.
2010 Outlook: I view Coach Inc. as a long-term play, but if investors are looking to sell COH within the year, it's probably best to take your profits after it rises to $43-44, if it fails to clear $45.
Stock Analysis: I consider Coach Inc. to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in COH now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 50% of my COH position before October 2010 and I'd put a sell/stop loss at: $18.50.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
The First Call FY2010/FY2011 EPS estimates for COH are $2.25 to $2.55. Each EPS estimate looks about 5% low, according to my analysis.
Technically, Coach corrected more-than-expected this summer, but the uptrend remains intact, and the stock appears poised to rise back above the key, 50-day moving average.
2010 Outlook: I view Coach Inc. as a long-term play, but if investors are looking to sell COH within the year, it's probably best to take your profits after it rises to $43-44, if it fails to clear $45.
Stock Analysis: I consider Coach Inc. to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in COH now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 50% of my COH position before October 2010 and I'd put a sell/stop loss at: $18.50.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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