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Specialty Retailers Poised for a Robust 2014

David Becker
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On the heels of a slightly softer than expected retail holiday season, there will be a few luxury retailers that benefit from the current market environment including specialty retail Coach. Coach Inc (NYSE:COH) designs and markets bags, accessories, business cases, footwear, wearables, jewelry, sunwear, travel bags, watches, and fragrances for women and men in the United States and internationally.

Hedge fund managers like John Rogers at Ariel Appreciation, Stephen Mandel of Lone Pine Capital and Robert Olstein of Olstein Value have added to their Coach stakes for the past two quarters. Coach’s has had considerable success recently in adding new product lines, like shoes and a new men’s line, and its established worldwide cache.

The 52-week range of HPQ is $ 45.87 – $61.94, and the stock hit a 52-week high in late-August. The quarter over quarter earnings per share was flat, while the three year growth rate of earnings up 14%. Sales were also flat quarter over quarter and the three-year growth rate of sales was up 12%. The company has a reasonable price to earnings ratio of 15 and profit margins of 31%.

Recent insider buying makes the stock look attractive. Chairman and CEO Lew Frankfort acquired 21,000 shares of this luxury accessories and Apparel Company, paying $48.38 per share for a total amount of $1.02 million. Mr. Frankfort increased his stake by 1.03% to 2,053,141 shares with this purchase.

The technical outlook is positive as the stock stabilizes forming a cup and handle pattern that is a pause that usually refreshes. Support is seen near the 20-day moving average near 56, while resistance is seen near the 50-day moving average near 53. Momentum is gaining strength as the MACD (moving average convergence divergence) index generated a buy signal as the spread (the 5-day moving average minus the 13-day moving average) crossed above the 6-day moving average of the spread.

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