Handbag and accessory maker
Coach (NYSE: COH), one of the best-known names in high-end fashion, has also been one of the best-performing stocks in the
bull market that started in 2009. From its
bear market lows, COH gained 599% before peaking in March.
Since
then, the stock has pulled back and is trading 30% below its all-time
highs. The chart below shows that the price could be headed even lower
in the short term.
Despite
the stock's recent struggles, Coach is still a great company for the
long term. And at the right price, this stock is a buy. But right now it
looks like it is a little too early. I think the holiday shopping
season could lead to an additional sell-off in the stock that would push
COH
shares down to where I would like to buy them.
As you can see in the chart below, since COH peaked, competitor Michael Kors (NYSE:
KORS) has been a
market leader. The two companies are competing for many of the same customers, a demographic group that marketers
call "aspirational consumers" who have limited
discretionary income
but want high-quality products. If KORS sees strong sales this holiday
season, that revenue could come partly from customers choosing Michael
Kors products over similar products that are available from Coach. But
these customers often rotate between brands, and eventually they should
return to Coach.
(more)