A Confirmation of Growth
If you’re looking to add a little risk to your portfolio, then Coach, Inc. (NYSE:COH) after earnings is your investment. On Tuesday, the stock gained 9.80% after reporting its quarterly results, one in which it grew revenue by 7% yoy. Both North American and international sales were strong, but the big winner was the company’s men’s business, which is on pace to double to over $600 million this year. Furthermore, the company increased its dividend 13% and is now paying a yield of 2.67%.
Coach, Inc. (NYSE:COH) has been very inconsistent over the last year, losing 21% of its value, as investors fear that its growth potential had peaked. However, there are many positives from this quarter to suggest long-term growth. Sure, comparable sales were up only 1%. However, China is growing 40% and the men’s segment continues to grow as well. This is a stock trading at just 13.60 times next year’s earnings, and I think Coach, Inc. (NYSE:COH) makes a good investment with upside and most risk priced into the stock.
In my book, Taking Charge With Value Investing (McGraw-Hill, 2013) I spent two chapters on talking about nothing but earnings, showing investors how to use the stock reaction to their advantage. Yet very few know how to use earnings to their advantage, and it is a somewhat simple skill that can lead to fundamental gains that all investors should try to perfect. While there are many steps to learning how to improve your success when buying after earnings, a core rule is to first read the quarterly report and then second view the stock. Then, you can determine whether a reaction was logical, and if not, you can profit from the illogical trading.
The article Three Stocks I’m Buying After Tuesday’s Earnings originally appeared on Fool.com and is written by Brian Nichols.
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