Coach (COH) : Better Investing’s Growth Company of 2007

For the third year in a row, Richard Chauncey of Rochester, NY, nominated the winning stock in Better Investing’s Growth Stock of the Year contest.

This year, he won with Coach (COH), a designer, manufacturer and retailer of high-end women’s accessories, primarily leather handbags. In 2006, Richard won with Ceradyne (CRDN) and, in 2005, with Cognizant Technology Solutions (CTSH).

Richard sure knows how to pick growth stocks and, perhaps more importantly, knows what the judges want to read. Congratulations to Richard!!

When he did his SSG in March, he got a 1.6 Upside/Downside Ratio and a 11.2% Total Return which do not satisfy the SSG Buy Criteria. However, the contest does not require stocks to be SSG Buys and only looks at historical results as well as the quality of the SSG (this criteria is not explained).

COH’s price has come down some $5.00 per share since last March and I currently show it as a SSG Buy, but not StockCentral’s Take Stock Online.

Analysts are now estimating around 20% EPS growth for the next 5 years (First Call & S&P exactly) with Value Line high at 23.50% and Zacks low at 19.95%; Reuters less one Standard Deviation is 18.05% (20.21 – 2.15). All three SSGs used similar EPS estimates.

Here’s how our SSGs compare:

	Richard	Armin	Take Stock
Sales Growth	17.50%	17.00%	20.00%
EPS Growth	17.00%	17.00%	16.31%
High PE	28.0	29.0	28.5
High Price	$84.80	$107.60	$102.28
Value Line Hi Price	$55-80	$70-110	$70-110
Low PE	15.9	14.8	12.1
Low Price	$27.60 [2006 low price]	$25.00 [growth comp option]	$21.18 [growth comp option]
U/D	1.6	3.2	2.47 [imputed]
TR	11.2%	19.3%	18.1%
Price	$49.80	$44.53	$44.53
Buy Under	N/A	$45.28	$41.48
Date	3-9-07	8-31-07	9-3-07
Data Source	S&P	S&P	Hemscott

The primary reason I got a SSG BUY, but Take Stock did not, is our Low PEs: mine is based on the last 5 years, proportional after I reduced my High PE, while Take Stock’s is based on the lowest Low PEs during the last 10 years.

– Armin

ps: for my 11-20-06 analysis of Richard’s SSG for Ceradyne (CRDN) and for my 9-5-06 critique of Cognizant Technology Solutions, click here to get to my 2006 posts and then scroll down: http://stock-analysis-with-ssg-and-pert-a.blogspot.com/search?updated-min=2006-01-01T00%3A00%3A00-08%3A00&updated-max=2007-01-01T00%3A00%3A00-08%3A00&max-results=13