Michael Kors Still Rules the Luxury Goods Space, But Coach Has Its Virtues Too
Dec 18th 2013 5:40PM
Updated Dec 18th 2013 5:42PM
The fierce rivalry between luxury goods makers Michael Kors and Coach , and to a lesser extent Fossil Group and Jones Group , always seems to fuel debate among investors about which stock provides more bang for an investor's buck. It's not particularly hard to single out Michael Kors and Coach as the true leaders of the space, but choosing between the two can be a daunting challenge for investors trying to build a diversified portfolio. Both stocks are good investments with their fair share of strengths and weaknesses.
Michael Kors is a high-flying momentum stock with considerable potential for big gains, but at elevated risk. The Hong-Kong based company made its debut on the market in 2011 with $1.3 billion in revenue and slightly less than $150 million in profit. Investors who opened positions in the stock back then have been handsomely rewarded, with their investments more than tripling since the stock started trading.
The risk profile for Kors remains significantly steeper than that of its rival mainly because of the unusually high expectations for revenue and income growth from its investors. Zacks Investment Research expects the company to deliver an astounding 43.81% growth in earnings in fiscal year 2014, and an average of 25.38% over the next five years.
In sharp contrast, Coach is expected to post much less impressive earnings growth: (-6.89%) in fiscal year 2014, and 11.58% average growth over the next five years.