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Coach, Inc. (COH) Sale Won’t Last Forever!

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Investing can sometimes seem like a daunting task.  What should I buy, and when should I buy it?  Yet, when most of us are at the grocery store, or out shopping for clothes, we can always spot a deal.  In fact, nothing is better than finding that particular item on sale that you have had your eye on for months.  And that brings us to a company that is currently on sale, and one that you should consider adding to your portfolio, Coach, Inc. (NYSE:COH).

Coach is mostly known for being the first handbag in the arsenal of any aspiring fashionista. Coach, Inc. (NYSE:COH) has been in existence since 1941 and boasts over 500 stores in the US and Canada, along with over 300 locations in China, Japan, Singapore, and Taiwan.  To put it simply, Coach, Inc. (NYSE:COH) is an established company with significant brand power and the Coach handbag is a right of passage for young women.

Coach, Inc. (NYSE:COH)What everyone else is saying

Last quarter Coach, Inc. (NYSE:COH) disappointed Wall Street analysts because North American store sales were subpar and revenue growth was paltry.  In comparison, Michael Kors Holdings Ltd (NYSE: KORS) has been the darling of the ball of late as the stock continues to soar and sales impress.  Also nipping at the heels of Coach are hip designers Kate Spade and Tory Burch.  Coach is old, boring, and on the way out.

Not so fast

Once upon a time, Howard Marks wrote a memo to his Oaktree clients entitled “Ditto.”  In it, he outlined what it takes to be a contrarian.  According to Marks, the successful contrarian investor sees what others are doing, understands why they are wrong, is able to sense intrinsic value, and buys when others are selling.  So, let us apply this wisdom to Coach.

We already tackled what others are doing.  Share prices of Coach are hovering around 52-week lows because investors have been quick to dump the company due to sleek new competition and a bit of a hiccup in the performance of the company.

Are these investors wrong?  I believe they are.  While Michael Kors is incredibly hot right now, I still believe that Coach is a brand with staying power.  Coach is only a quarter away from posting numbers that the analysts will like and all of sudden Wall Street will fall in love again.

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