By Jordan Faigen
You might be adding more Michael Kors Holdings Ltd (KORS) items to your wardrobe and to your portfolio after the latest quarterly earnings.
Michael Kors in the News
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Today, the fashion house, Michael Kors Holdings Ltd (NYSE:KORS) released its fiscal fourth-quarter results, revealing a profit surge of 59% and earnings of $161 million, up from $101.1 million last year. Chairman and Chief Executive John D. Idol was pleased with the quarter, noting, “We believe that our expanding global brand awareness is driving continued strong demand for our luxury product and fueling our growth as a global luxury lifestyle brand.” The company is already on their way to increasing their influence by expanding men’s clothing and accessories into a $1 billion business and they saw great success in American sales, with a 21% increase in same-store sales, and revenue in Europe more than doubled to $164.7 million.
A Financial Expert’s Opinion on KORS
Agora Financial analyst, and TheStreet.com contributor, Jonas Elmerraji recommended BUY Michael Kors yesterday, just one day before the release of these impressive numbers. Elmerraji pointed out that Michael Kors, “is one of just a few ‘growth names’ that’s actually managed to grow its share price in 2014. Since the calendar flipped to January, KORS has rallied close to 19%, besting a 2.8% run from the S&P.” He also argues that the company is in the perfect position, saying, “Michael Kors is in stellar shape. The firm has historically managed to expand its footprint using cash from operations, growing its store footprint materially without resorting to debt. Instead, the firm carries more than $828 million in net cash as of their last filing.” Elmerraji was projecting “a potential upside catalyst” from the earnings report. He has a +12.6% average return on the stock.
Jonas Elmerraji’s Past Recommendations
Elmerraji has experience recommending stocks across sectors including, internet company Priceline.com (PCLN) and Wells Fargo (WFC). In addition to his strong Michael Kors recommendations, these ratings have helped him earn a +4.2% average return over S&P-500 and a 61% success rate of recommendations.
In June of last year, Elmerraji recommended BUY Michael Kors Holdings Ltd (NYSE:KORS) as one of his “Rocket Stocks Worth Buying”. He pointed out that the company, “has had a strong showing since it went public in late 2011. Shares have rallied more than 152%, besting the S&P’s 33% climb over that same period and stomping the pop and fizzle performance of other IPOs that went public around the same time.” He also noted that, “KORS’ niche focus on mass-affluent consumers puts it in the sweet spot of luxury spending,” and most importantly, “A pristine balance sheet at KORS means that the firm carries no debt – but it’s been piling away considerable cash quarter after quarter. Today, that cash balance stands at $472 million, an amount that leaves the door open for boosted shareholder yield in 2013.” The stock went from $61.56 to $80.80 by the time of his next recommendation in December 2013.
Elmerraji also has a solid return recommending Wells Fargo. In November of 2013, Elmerraji recommended BUY Wells Fargo & Co (NYSE:WFC) due to its “solid year in 2013.” He argued that, “Wells Fargo is certainly the best-positioned of the big banks. Wells was one of the best-capitalized names heading in to the Great Recession five years ago, and it’s continued that tradition all the way out, picking up Wachovia’s huge deposit base along the way.” Elmerraji also noted that, “Right now, Wells Fargo boasts one of the heftiest dividend payouts among mega-cap financial firms, and that cost yield should continue to grow for investors who get in early.” After this recommendation, the stock jumped from $41.70 to $50.55 by the time of his next recommendation in May of this year, helping him earn a +10.6% average return on the stock.
Moving away from the banking sector, Elmerraji has also had success recommending Internet company, Priceline.com. In December of 2013, Elmarraji recommended BUY Priceline noting that it “has been a phenomenal year for shareholders in Priceline.com.” He noted, “While the U.S. travel market is very commoditized at this point, Priceline Group Inc (NASDAQ:PCLN) brand recognition ensures that it still receives a disproportionate amount of bookings — and moves like the acquisition of travel content site Kayak mean that the site is trying to prove its ability to add value beyond ease of booking.” Based on his four Priceline.com recommendations, he has earned a +5.1% average return on the stock.
However, Elmerraji has also experienced a few losses, including his SELL Verizon (VZ) recommendation from May 30, 2013. Elmerraji argued that, “The rounding top pattern is a setup that indicates a gradual shift in control from buyers to sellers. Verizon Communications Inc. (NYSE:VZ)’s move down through $51 support was the watershed event that signaled a sell in the stock.” Adding, “That puts VZ’s high probability price action below it in the near-term. Investors shouldn’t count on this stock’s relative weakness to abate anytime soon.” However, the stock actually rose, leaving Elmerraji with a -0.5% average return on the stock.
According to Elmerajji appears that Michael Kors Holdings Ltd (NYSE:KORS) is ready for a strong year. Will you be rushing off to shop for your portfolio?
Jordan Faigen covers financial markets and the latest stock market news. She can be reached at [email protected]