Category Archives: $COH

LON:ASC (Asos) continues to go lower – should you buy here?

Investors and customers of fashionable retail stocks join and leave in Herds!

Look at the chart of SuperGroup (SGP), KORS (Michaeal Kors) and COH (Coach) – they all gain popularity with customers, then the stock prices show high growth expectations as investors get involved, these growth rates are normally very difficult to achieve, as in order to meet expectations sales have to rise – but then the brands lose their appeal as they become more popular, creating the opposite effect – a glut in inventory, discounting and a fall in sales and margins!

So, buying high flying retail stocks above 30% 5Y Growth is a dangerous game… Asos reached an incredible 70% implied growth over 5Y when at 70 pounds only 6 months ago!

If you want to get into a fashionable retailers, buy when the implied growth is reasonable and you think the brand is sustainable (like Next!)

2CentView Fair values and 5Y implied growth

Asos 2000 (30%)
SGP 950 (10%)
KORS $64 (17%)
COH $36 (13%)