Is This Red Carpet Stock Worthy of an Oscar? Michael Kors Holdings Ltd (KORS), Ralph Lauren Corp (RL)

Each year, I throw an Oscar party for my fashion-obsessed wife. I’ve thus come to know some of the better brands in the business, none of which interests me so much as Michael Kors Holdings Ltd (NYSE:KORS).

Kors, whose premium designs stretch from clothes to accessories found on the shelves at Apple Inc. (NASDAQ:AAPL)‘s retail stores, took his company public in December 2011. The stock has soared more than 145% since, and that’s after accounting for a brief sell-off connected to a shelf registration that allowed a number of insiders, including Kors, to sell millions of dollars in stock on the open market last week.

Michael Kors Holdings Ltd (NYSE:KORS)I’m not so sure that’s a good reason to avoid the stock. Why? Insiders liquidate all the time. Facebook Inc (NASDAQ:FB) shares sold off in the months leading up to last November, when employees and early investors were free to sell 800 million shares. The stock rallied as fears went unrealized.

Could the same happen here? Why not? Kors’ wares have rarely been more popular than they are now. According to Digital Luxury Group, Kors is the most-searched-for fashion label online, beating Marc Jacobs and Ralph Lauren Corp (NYSE:RL).

The company also stands out financially when compared with its peers:

Metric Michael Kors Ralph Lauren
Revenue* $1,964.6 $6,924.4
Employees 4,180 25,000
Revenue Per Employee $470,000 $276,976
Return on Assets 38.9% 12.8%
Days Inventory Outstanding 103.2 121.2

Source: S&P Capital IQ.
*In millions.

No doubt Ralph Lauren has a great business. Yet right now, Kors is not only more popular but also performing at a higher level. You’d think that would merit a premium valuation. Instead, the stock trades for 24 times forward earnings, versus 18 for Ralph Lauren. Analysts see Michael Kors growing profits more than twice as fast as Ralph Lauren over the next five years.

My point? There’s substance to the style at Michael Kors. Those ignoring this truth may regret selling a year from now. But that’s also just my take, and you may have a different view. Please share your thoughts in the comments box below.

The article Is This Red Carpet Stock Worthy of an Oscar? originally appeared on Fool.com and is written by Tim Beyers.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple at the time of publication. Check out Tim’s Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool and owns shares of Apple and Facebook.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!