Today’s Daily Alert recommendation comes from Cabot Market Letter, edited by Michael Cintolo.
“The market continues its slow-but-steady improvement — our market timing indicators are looking better and leading stocks are gradually pushing higher. There’s still not a ton of power, but the evidence has improved, so we’re adding two new stocks tonight to the Model Portfolio. ...
“Michael Kors Holdings Ltd. (KORS, $49) is back in the Model Portfolio; we owned it earlier this year but the stock ended up being dragged down by the market’s spring correction.However, the stock has gone on to build a near-six month consolidation, and this week’s earnings report was jaw-dropping: revenue growth reached 71%, its highest rate in many quarters, while earnings boomed 162%, coming in well ahead of estimates. Amazingly, same-store sales rose 37% (!!) and management believes such rates are sustainable; they significantly hiked estimates for the next year. We’ve seen KORS’s pattern (a huge post-IPO run-up, a long base and a powerful resumption of the uptrend) from some big winners over the years, and combined with its fantastic story and numbers, we think KORS can follow suit.
“The stock is normally volatile and it gapped up strongly this week, so it could meet with some resistance in the 50 area. Thus, you might consider a smaller-than-normal position (one-half to two-thirds of your normal size) to start. BUY.”
- Michael Cintolo, Cabot Market Letter, August 15, 2012