I’m filing this update from the beach. I’m on vacation the week of March 29 April 2. Unless the sun stops shining here in the Bahamas (or the kids decide to hire themselves out on a fishing boat), I don’t anticipate filing more than once a day for this week. JubakPicks.com will go back to its normal schedule on Monday April 5.
Update Coach (COH)
Let it run. Coach (COH) hit my October 2010 target of $40 last week, but the numbers on the U.S. economy look good enough in the short run and the momentum of U.S. stocks is strong enough right now that I’m going to keep this money on the table. (For more on why the U.S. stock market is likely to be the best performing stock market in the world in the next three months for so, see my post https://jubakpicks.com/2010/03/19/how-long-can-this-last-the-u-s-stock-market-is-out-performing-the-world/ )
I think Coach has done a great job of navigating through the economic slowdown by shifting its price points and managing the mix between its full-price and out let stores so that sales stayed strong but margins didn’t take too much of a beating.
Now Coach gets to reap some of the reward for handling the downturn so well.
With growth picking up in the U.S. economy, Coach’s mix will shift again but this time back in favor of its full-price stores. In those stores customers will find lines that fit these recovering but still not flush times. Coach has added products to keep 50% of its handbags at $300 or less. The shift in favor of full-price stores should drive gross margins higher: Standard & Poor’s is looking for gross margins to improve by about 0.3 percentage points in the fiscal 2010 year that ends in June.
The long-term future for the company looks solid too. Coach finished 2009 with about $1 billion in cash. That should be more than enough to fund the company’s planned expansion in China where the company now owns just 4% of the luxury goods market.
As of March 29, 2010 I’m raising my target price to $44 a share by October 2010.
Full disclosure: I own shares of Coach in my personal portfolio.
Off Topic:
An interesting article about a brokerage that lets you pay an annual fee of $250 in return for access to institutional shares of mutual funds. Plus you can avoid the high minimums. Very intersting: http://articles.moneycentral.msn.com/Investing/MutualFunds/a-costco-for-mutual-funds.aspx
Jim, I know this is off topic, but a number of us would really like to know how to play Ormat now that there is a class action against them for Securities Act violations. I purchased shares of Ormat during the pertinent time window and am now participating in the class action. Do you have any trade recommendations?
wish I read this on Friday, when I sold COH at $40.25. Oh well, I did ok with it and I appreciate Jim’s recommendation. I noticed alot of economists predict a slow down for the 2nd half of 2010. Couple that with possible (likely) inflation overseas you might see an increase in the demand for gold. I read that Gold production is predicted to be steady (not up as a number of mines are showing reduced yield and not enough new mines are coming on line) I think the price of gold will go up due to stable supply and increased demand … So, I’m thinking about picking up Kinross, GG or Newport Mining.
Regarding Coach, my wife was my financial advisory 🙂 Wise lady!
Holiday? Never been to the bahamas but we sure love Phuket.
I bought ABV today for what it’s worth.
100 shares, with a 2% stop.
Why ?
Because it had a long run down.
Because it was at the bottom stocastic on the daily and weekly charts.
Because DIA has crossed, and held the 200 day on the weekly chart.
Because ABV it is double basing on the weekly, and it has a higher low on the daily.
The way I figure, I could loose 200 bucks.
I will not claim to be a great technician, maybe any of you who are could comment?
Thanks.
Hello Jim, Readers
Do you know of any ETF or Fund tracking S&P 5-Star stocks? I am impressed by how well they have fared over the last so many years, and was interested in buying into an index fund.
thanks ntack5
VSA, read… http://www.investopedia.com/articles/basics/05/052005.asp The significant difference is due to debt (ROE gets a boost with debt). ROA is truer measure, unless you are talking about banks, which are in the business of selling debt.
You can google a bunch of other related topics. Type in ROA vs. ROE. Return on investment is generally applied to a specific investment b/c it’s impossible to know all the investments. ROIC is sometimes used for ROA.
Good for you, man! Taking these trips is all about deciding you’re going, planning it, and doing it. Not someday, NOW!
Enjoy the sunshine and relaxation. We all appreciate the advice, and you deserve it.
Hi Jim, Hope you enjoy a well deserved break!!
Jim, fellow readers:
I had a question related to Return on Invested capital (https://jubakpicks.com/2010/03/02/the-one-must-have-number-for-successful-long-term-investing/). As per Jim, this is the single most important number that we should care about for a stock…
My question is that, for any given stock I see the following – Return on Assets, Return on Equity, and Return on Investments.. Are all of these numbers important? Or did Jim wish to say that the last one is the most important? Can anyone explain the significance of the first two figures?
Jim, would you recommend the Bahamas for vacation, lets say with a time frame of 6 months?
Have a good rest.
Enjoy your vacation Jim. I wish I had taken your advice and bought this one.