COH

Giddy Up – It’s Earnings Season!

by

By Brian Nelson, CFA During the trading session January 27, Apple (AAPL) failed to turn the tide of a disappointing fiscal 2016 first-quarter report (calendar fourth-quarter), “Apple Will Go Lower…And It Will Be ‘Forced’ Into Acquisitions,” and coupled with a Fed statement, where the Committee left interest rates unchanged, as expected, many market observers read between the lines and hit the sell button. On the basis of some of the concerns we’ve outlined, “Not Doom and Gloom – But Just Cautious,” we can completely understand the hesitancy by participants to stay fully exposed to this tumultuous equity market. In many ways, that the Fed has hit the brakes just a few weeks after the long-anticipated rate hike means the global … Read more

Coach Back on Track?

by

Coach (COH) has been somewhat of a black mark on the “hit rate,” or percentage of ideas outperforming the broad market return, in the Dividend Growth Newsletter portfolio, and while we continue to encourage readers to evaluate the weightings we ascribe to positions in the newsletter portfolios for insight on our level of conviction, that Coach resides in there at all means it had been one of our top ideas, added September 19, 2014 at $37.55. Coach currently yields ~4.5%. When we first added Coach to the Dividend Growth Newsletter portfolio, we were aware of the fashion risks and the troubling signs in its North American women’s handbag business. What we liked most about the company, however, was its fantastic … Read more

Assessing the Fallout from the Collapse in China’s Stock Market…Thus Far

by

No longer do we live in an isolated world. If you weren’t convinced of this before the Global Financial Crisis, the credit crunch of late last decade should have changed that. Just as the interconnectedness of global financial markets is undeniable, we think the significance of the health of the Chinese economy is as critically important to the trajectory of equity prices across the globe. That’s why we’re not taking the recent collapse in the Chinese stock market lightly. Here’s what we’re hearing. China’s major restaurant bellwether, Yum! Brands (YUM), owner of KFC, addressed whether a decline in the country’s equity market has impacted sales. Though the company noted that “a very small percentage of customers have been impacted,” we’re … Read more

Is The Time Ripe to Pick Up Kors?

by

You just can’t buy cheap stocks, and hope and pray things will work out. You know this! Not you personally — you know, the universal you.  The fundamental framework of the Valuentum Buying Index protects you from falling knives. It requires stocks to be both underpriced and “going up” before we would consider them. Yes, we can talk castles, moats, dividends, and anything else you’d like. But the VBI is the essence of our teachings. It’s the culmination of all research and analysis. We’re not kidding. Name it. It’s in there. The best stocks will be ones that are underpriced on a whole variety of different metrics and are also experiencing buying action or accumulation, as revealed by an upward … Read more

Coach…Ouch!

by

Image Source: m01229  On April 28, Coach (COH) reported a doozy of a calendar first quarter. Sales fell 15% while adjusted net income dropped to $0.36 per share from $0.68 per share in the year-ago period. For many, as with us, it’s difficult to accept such declining performance. However, we think the market is simply overlooking a recovery that we think will eventually take hold. Brand transformation is a difficult maneuver but something that Coach looks to be executing upon, albeit slowly. The company’s international business posted decent growth on a constant-currency basis thanks to fantastic expansion in Europe and China, the latter increasing 10% on a constant-currency basis. The executive suite drove sequential improvement in its North American bricks … Read more

Pain in Oil Not Likely To Subside Soon; Alibaba Disappoints

by

Just how bad are we drowning in crude oil? Yesterday’s inventory report showed the largest weekly supply increase in over 30 years, since 1982. That’s how bad. Yet, knowing that crude oil prices are driven by supply and demand, pundits continue to be optimistic, perhaps overly so, about the timing of the recovery in the price of the black liquid (USO). Let’s first start with OPEC, and the Secretary-General Abdullah al-Badri, who said Tuesday that oil prices have bottomed as he “warned of a risk of a future price spike to $200 a barrel.” With inventories as they are and OPEC not ceding market share to US shale-based plays, we think the Secretary-General is drinking a bit too much Kool-aid. … Read more

4 Opportunistic Stocks To Consider Buying in 2015

by

The Valuentum Buying Index (VBI) is a philosophy that considers the valuation of a company and the likelihood that a company’s stock will converge to a cash-flow derived fair value estimate. The VBI accepts the view that value is based on the sum of a company’s future expected discounted free cash flows and the excess cash on its balance sheet, while acknowledging that market participants must eventually agree with a firm’s underpricing (and buy the stock) in order to drive the stock’s price to fair value. An underpriced stock with no buying support is not poised to generate good returns, nor is an overpriced stock with good momentum as it will eventually succumb to panic selling once euphoria fades. Stocks … Read more

Merger Talk: Coach May Be In Play

by

With interest rates at lows, the equity markets at all-time highs, and executive teams looking for strategic and opportunistic growth opportunities, the table is set for some wheeling and dealing, in our view. We think Coach (COH), the aspirational maker of handbag and accessories, is on the radar of a number of suitors, the most likely being LVMH Moet Hennessy (LVMHF), according to Prime Retailer: LVMH groups representatives have recently shown interest in Coach, sources say. Recent shows and fashion line has appealed to the design team of LVMH, one of the persons admits. It could be the turnaround that attracts LVMH – turning its attention from classical high end luxury accessories label to full RTW apparel lineup. There are … Read more

Valuentum Update – Post-Thanksgiving

by

Hi members, We hope you had a long and happy holiday weekend with your families! I wanted to touch base today for a variety of reasons. I received a few emails over the holiday weekend regarding a couple of the newsletter portfolio holdings that are trading down with the markets.  Nothing out of the ordinary, but for those who are new to the stock market, this may be a bit startling and confusing. If you didn’t know already, we target the best ideas to converge to intrinsic value over a 12-24 month period, and sometimes longer, if market conditions do not cooperate. First, you should be aware of the collapse in crude oil prices (1). As it relates to the … Read more

Highlights from Tiffany’s Third Quarter

by

TIFFANY REPORTS SOLID THIRD QUARTER RESULTS Key Takeaways from Tiffany’s Third-Quarter Results Tiffany (TIF) is executing fantastically, and the Americas region, where comps jumped 11% in the quarter, was the standout. We expect the US to be the bright spot in the global economy for the holiday season across the luxury goods space. The US consumer is relatively healthy (the preliminary reading for GDP in the third quarter, released today, was 3.9%, a very healthy pace).  Tiffany has become a gross margin story. The firm’s gross margin increased 250 basis points in the third quarter thanks to strong pricing, better cost controls, and a mix shift to higher-margin fashion jewelry. We expect sales and margin strength to continue into the … Read more