Can Michael Kors Holdings Ltd (KORS) Double in Price by the End of 2013?

The answer is surprisingly simple: Wall Street is obsessed with revenue growth and earnings.

These are the first two areas I look for trends when I’m assessing a stock because I know how obsessed the Street is with these numbers. If you’re a long-term investor and have a lot of faith that a company’s management isn’t going to let the business slump, then don’t be concerned about occasional quarterly disappointments in these figures. Your attention will best be focused on annual figures.

Ralph Lauren and Coach both had dips in quarterly revenue and net income in 2012, while Michael Kors continued to grow both their top and bottom lines at impressive rates. As a result, Kors’s shareholders were rewarded. I still think Coach and Ralph Lauren can be good buying opportunities, though, so don’t write them off just for missing a few earnings or revenue estimates.  Michael Kors will likely meet the same challenge someday itself.

If you want to buy a retail stock instead of getting into individual apparel designers I would recommend reading a recent article I wrote: Retail Stocks: The Bad, The Ugly, and the Worst. Both Macy’s, Inc. (NYSE:M) and Kohl’s Corporation (NYSE:KSS) are noted as stocks that have outperformed their peers in recent years, with Macy’s being the best performer, up 60% in the last half-decade.

Both retailers sport low P/E ratios of 12.4 and 10.5, respectively, and carry less volatility than the overall market. Macy’s is my favorite retail performer, as revenue, income and EBITDA have all been growing the past two years, and the company’s appreciation has been very impressive. With a 2% dividend yield to top it off, it might not be a bad idea to pair this stock with an apparel player like Michael Kors.

Disclosure: I have no positions in any of the stocks mentioned above