Coach, Inc. (COH)

MattH42004 (99.90) Submitted: 4/2/2009 12:06:10 PM : Start Price: $14.97 COH Score: +107.10

Okay, lets see what we have

- Excellent balance sheet. COH has no real debt and net cash of over 400m.
- High profitability. COH has consistently maintained profit margins in the 20-25% range.
- Great management. The CEO is the best in the retail business (see above) and owns 5% of the stock.
- Solid growth potential. COH is in the process of a very profitable Asian expansion. The possibility of introducing lower cost goods could expand the costumer base as well. Also, the massive failures of their competition (think Macy's/Nordstrom) will only help to increase market share. Their loss is COH's gain.
-Good valuation. COH is currently trading at about 9x estimated forward earnings. This is even cheaper when compared to the companies growth rate.

COH looks like a solid bet to outperform. The near-term will be rocky, and margins will likely compress as consumer credit still remains tight. However, COH's current margins and balance sheet will give them a much easier road through this economy than their competition. The potential increase in spending from mortgage refinancing and tax cuts could help prop up near-term sells as well.