Courtesy of Dr. Paul Price
Aspirational leather goods designer/manufacturer Coach (COH) got creamed in Wednesday’s trading when overall retail sales numbers showed poor year-over-year growth. COH dropped $3.39 per share (-5.89%).
The stock is down $25.53 (-32%) from the 52-week high of $79.70. Does that mean that earnings have been bad? FY 2012 (ended June 30, 2012) came in at $3.53, an all-time record . Q1 was up 5.5% from a year ago.
The company is net debt free. Dividends were initiated in 2009 and raised every year since. The current quarterly payout is 30-cents for a yield of 2.22%.
That’s the highest yield ever on this remarkable growth stock. A look at the company’s past 10 years shows just how well Coach has performed. (Click on charts to enlarge)
Coach suffered its only down year in FY 2009 due to the Great Recession. EPS dipped all of 7.3% (from $2.06 to $1.91). Buyers who bought during H2 of that decline snared a triple in one year and an ultimate shot at 600% gains.
Shoppers that would love to buy Coach merchandise at one-third off are passing up pretty much the same discount on the shares. The only way to get great values on high-quality stocks is to buy when things look bad. I was a buyer of Coach shares today, and we already own it in Market Shadows Virtual Value Portfolio.
If you are worried about being too early … consider this 13-month combination buy/write out to January 2014.
Disclosure: Long Coach shares
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