Coach, Inc. (COH) Sale Won’t Last Forever!

Page 2 of 2

Buying Coach now is a textbook value play.  You can get a premium company near its 52-week low with a P/E of 12.91 and a dividend yield of 2.5% – how pretty is that?  Compared to Michael Kors, this is a five-finger discount.  Kors is near its 52-week high with a P/E of 34.65 and not a single penny given back to shareholders.  The value here is clear, would you rather buy a Coach bag on sale or pay a premium for Michael Kors?

Alas, there’s the rub

The money is flowing into Michael Kors while investors shy away from Coach.  Even though Wall Street sentiment is against Coach, I believe there is too much value here to pass up, both as a company and in the stock price.  Coach is a long-term contrarian’s dream.  Do not worry about looking bad in the short term; if the stock price continues to fall, I recommend buying more.  Believe in the company, enjoy the dividend, and wait for the stock to rise as generations of women continue the tradition of buying their very own Coach handbag.  As Don Yacktman says, wait to buy great companies when they’re down and then ride them until they recover.

The article The Coach Sale Won’t Last Forever! originally appeared on Fool.com and is written by Johnathan Roberts.

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

Page 2 of 2