Barron’s Online had an article which basically laid out the case for buying poor old beaten down COH vs the ever-ascendant KORS. Summary, COH has become as cheap as a value stock - 14x fwd PE, 2.6% div, low debt, increasing dividends; while delivering some growth and a huge RoE. KORS is overvalued - 29x PE and the founder has reduced his stake from 12% at IPO in 2011 to 2.4% now. COH is down 38% from peak and 16% YTD, KORS is up 60% since IPO.
If someone put a gun to your head and made you buy one (and only one) of the two, which one would you choose? Why?
My wife accounts for at LEAST 17% of COH top line revenue so I gotta go COH… Seriously though…i would really want to look at their inventory levels, check out DOH and their CCC. I noticed at several of their stores they seem to have so much inventory that theyre always trying to blow them out with 30-40% off. If inventory appears healthy, I think I would have to choose COH