As the economy continues to improve, today’s recommendation is taking advantage of increasing discretionary income to expand the reach of its business. Recent discounting of the stock is providing a timely buying opportunity.
Michael Kors (KORS)
from Cabot Market Letter
Since growth stocks began to run into trouble toward the end of September, one theme that’s emerged is dependable growth—which is not so much defensive names as it is companies that have reasonable valuations and a long, predictable runway of growth.
Luxury designer Michael Kors (KORS) fills the bill, with the potential to more than double its current store count (264 North American and 88 international, at the end of the third quarter).
The company sells women’s and men’s apparel; accessories, which include handbags and small leather goods; and licensed products comprising watches, fragrances, and eyewear.
Michael Kors also intends to greatly expand its wholesale operations overseas. International revenues from stores in 85 countries were just 16% of the total sales last quarter. And the company is also diving into new product lines, including jewelry.
The stock hasn’t been super-strong, but it remains in a choppy uptrend, and the current low-volume dip in the wake of its addition to the S&P 500 (which is common) looks like a good buying opportunity.
Michael Cintolo, Cabot Market Letter, www.cabot.net, 978-745-5532, November 26, 2013