Company name Coach, Inc.
Stock ticker COH
Live stock price [stckqut]COH[/stckqut]
P/E compared to competitors Fair

MANAGEMENT EXECUTION

Employee productivity Poor
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good

ANALYSIS

Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $55.24
Target stock price (averages with growth) $73.91
Target stock price (averages with no growth) $64.83
Target stock price (manual assumptions) $59.09

The following company description is from Google Finance: http://www.google.com/finance?q=coh

Coach, Inc. (Coach) is a marketer of fine accessories and gifts for women and men. Coach’s product offerings include women’s and men’s bag, accessories, business cases, footwear, wearables, jewelry, sunwear, travel bags, watches and fragrance. The Company operates in two segments: Direct-to-Consumer and Indirect. Accessories include women’s and men’s small leather goods, novelty accessories and women’s and men’s belts. Women’s small leather goods, which coordinate with its handbags, include money pieces, wristlets, and cosmetic cases. Men’s small leather goods consist primarily of wallets and card cases. Novelty accessories include time management and electronic accessories. Key rings and charms are also included in this category. Business Cases assortment is primarily men’s and includes computer bags, messenger-style bags and totes. Footwear is distributed through select Coach retail stores, coach.com and about 1,000 United States department stores.

 

Confident Investor comments: At this time, I think that a Confident Investor can cautiously invest in this stock as long as the price is correct. Most of the fundamentals of this company are good but there are some concerns. I will be removing this stock from my Watch List.

 

I recently read an article on CNN Money advising investors to invest in consumer product goods (CPG) companies. The logic was that CPG companies, as a group, have several features that should be appealing to investors:

  • Predictability – these companies can predict how much of a product can be sold in the short-term so they control pricing and inventory well.
  • Dependability – these companies are not going to see massive drops in revenue since consumer purchase their products regardless of the economic climate.
  • Pricing power – due to their brand loyalty, these companies can put forward regular price increases with little negative market reaction.
  • Global reach – while most of CPG companies get the bulk of their revenue in the western world, many have made significant investments in emerging markets.

The problem with the article is that the cited companies were fair at best, and some were poor. Instead of the CPG companies in the article, I suggest that you look at good companies such as Coach [stckqut]coh[/stckqut], Decker [stckqut]deck[/stckqut], Boston Beer [stckqut]sam[/stckqut], or Fossil [stckqut]fosl[/stckqut] (all of these companies are currently on my Watch List). If you want to own one or two of the companies in the article, P&G [stckqut]pg[/stckqut] (the stock symbol is not PR as cited in the article) or Unilever [stckqut]ul[/stckqut] are decent candidates – both companies are very well run.

Settling for companies that are familiar to you and you see on the grocery shelves may not be a good investment strategy.  I suggest that you focus your portfolio on companies that have more upside potential but are still very well run.

Motley Fool is a great website with very useful advice for investors. They recently ran an article that discussed the one investment you should make if you are a new investor and can only afford one stock. Their choice was The Procter & Gamble Company [stckqut]pg[/stckqut]. I haven’t review P&G in a long time (almost 2 years) and the EPS growth has improved slightly so it is now probably a Fair company as opposed to a Poor company back then. The article made me think – what one company would I recommend for a new investor?

Obviously, my choice would not be P&G since it didn’t make my Watch List. In fact, the stock has been fairly flat since I reviewed it 2 years ago (it is trading within 2 or 3 dollars today of what it was doing in February 2010). I have nothing against P&G as the company makes fine products. I brush my teeth and wash my body and clothes with P&G products on a regular basis. But making good products is not good enough. Motley Fool describes how P&G doesn’t surprise its investors very often and has a stable dividend. My problem with that logic is that if you are a new investor then you are likely a young investor (and by young I am saying under 60 years old) and you need your investment to accumulate for several decades.

As I pondered this question, I remembered my favorite advice to investors of all ages: don’t buy and hold rather buy and evaluate! Buying one stock and assuming you are going to keep it for decades is almost a guaranteed losing proposition compared to riding the fastest moving stock at the time.  The new investor needs to be agile with money. Buy a stock that is growing nicely and then when it starts to go flat or decrease in value, dump it and buy a different company that is hot.

Today, that one stock could be Apple [stckqut]aapl[/stckqut] or Coach [stckqut]COH[/stckqut] or Ebix [stckqut]ebix[/stckqut] since these three are all doing nice runs as I write this article (and there are others on the Watch List that are having nice runs as well.) Tomorrow is another question. I have no idea who will be having a solid run tomorrow or next week or next month. I do know that eventually all companies go flat and have a pull-back so I want to jump off the train when that happens and catch the next fast moving express.

So nothing against the good folks at Motley Fool, but I think the advice of one stock is just not good advice. I want to beat the market, not just match it with a “safe” investment.

Company name Coach, Inc.
Stock ticker COH
Live stock price [stckqut]COH[/stckqut]
P/E compared to competitors Good
MANAGEMENT EXECUTION
Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good
ANALYSIS
Confident Investor Rating Good
Target stock price (TWCA growth scenario) $62.74
Target stock price (averages with growth) $81.87
Target stock price (averages with no growth) $64.5
Target stock price (manual assumptions) $60.13

The following company description is from Google Finance: http://www.google.com/finance?q=coh

Coach, Inc. (Coach) is a marketer of fine accessories and gifts for women and men. Coach’s product offerings include women’s and men’s bag, accessories, business cases, footwear, wearables, jewelry, sunwear, travel bags, watches and fragrance. The Company operates in two segments: Direct-to-Consumer and Indirect. Accessories include women’s and men’s small leather goods, novelty accessories and women’s and men’s belts. Women’s small leather goods, which coordinate with its handbags, include money pieces, wristlets, and cosmetic cases. Men’s small leather goods consist primarily of wallets and card cases. Novelty accessories include time management and electronic accessories. Key rings and charms are also included in this category. Business Cases assortment is primarily men’s and includes computer bags, messenger-style bags and totes. Footwear is distributed through select Coach retail stores, coach.com and about 1,000 United States department stores.

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

Several times a year, a Confident Investor must reevaluate the companies in the portfolio. Keeping your money in a stock that no longer qualifies as a “Good” company can end up hurting your investment performance a great deal.  Also, there are a lot of Good Companies so losing the worst of the best is not going to impact the ability to have a balanced portfolio.  Over the coming days, this site will evaluate each stock on the Watch List.

Company name Coach, Inc.
Stock ticker COH
Live stock price [stckqut]COH[/stckqut]
P/E compared to competitors Fair
MANAGEMENT EXECUTION
Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good
ANALYSIS
Confident Investor Rating Good
Target stock price (TWCA growth scenario) $70.57
Target stock price (averages with growth) $89.7
Target stock price (averages with no growth) $67.16
Target stock price (manual assumptions) $68.94

The following company description is from Google Finance: http://www.google.com/finance?q=coh
Coach, Inc. (Coach) is a marketer of fine accessories and gifts for women and men. Coach?s product offerings include handbags, women?s and men?s accessories, footwear, business cases, jewelry, wearables, sunwear, travel bags, fragrance and watches. Coach operates in two business segments: Direct-to-Consumer and Indirect. During the fiscal year ended July 3, 2010, the Company introduced Poppy, which offers a variety of silhouettes. It also introduced additional lifestyle collections. The accessories include women?s and men?s small leather goods, novelty accessories and women?s and men?s belts. The Company?s footwear is distributed through select Coach retail stores, coach.com and over 950 United States department stores. The wearables category consists of jackets, sweaters, gloves, hats and scarves, including both cold weather and fashion. During fiscal 2010, Estee Lauder Companies Inc., through its subsidiary, Aramis Inc., became Coach?s fragrance licensee.

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.