Brian Huen Michael Kors Holdings KORS-N TOP PICK Jul 11, 2014

Continues to be a great name. Some of the weakness can be contributed to consumer discretionary names weakening a bit. There are also some current concerns on inventory build in the company. Currently trading at 17X forward earnings. With a 23% long term growth rate, that gives a PEG ratio of .7. Anything under 1 is quite good in this environment. Expanding their retail presence in North America with 400 stores expected. Only 20% of revenues are coming from outside North America.

(A Top Pick October 17/13. Down 2.27%.) The concerns are really about international markets and luxury purchases. However, only 15% of their revenues come from outside of North America. There was also concern about inventory built ups. His sources say that Michael Kors is still very hot with 20-30 year-olds. At today’s prices, you are getting this at .75 PEG ratio. Reporting in a couple of weeks, and if earnings are still on track and the momentum is still there with sales, this is a pretty cheap stock.

(A Top Pick Oct 17/13. Up 3.77%.) They have beaten earnings 8 quarters in a row and are trading at 18X forward earnings with a 20% long-term growth rate. The market is concerned about inventory levels, as well as some of the discounting that is happening in the stores.

The timing as to when this started falling out of bed had nothing to do with oil prices, but was in the early to mid-summer. This was one of those fantastic 5-6 year run stocks. An incredibly high multiple company for many years. However, coming into 2014, the multiple was in the 30s. Now back to an 18 multiple. Same-store sales growth abroad is rapid, so they are growing in Asia and other places at 30%-40%, but on a much smaller base. He just recently bought this. His view is that it is still going to grow at 20%-25% and the valuation is reasonable again.

The entry-level luxury market is a very risky one. It could be the flavour of the week where consumers cannot buy enough of it, and that could shift very quickly. Once everyone has one of their products, that ends up being it.

(A Top Pick July 23/14. Down 47.03%.) Sold it in March at $68. Made a little bit of money. Same-store sales really started dropping off and there were concerns about discounting. They are looking to expand into the overseas markets quite a bit, but is this the right time to do those things?

This is a classic fail of a technical break out. It is not a great thing. If you get a breakout and a fail, where it moves back to the area of consolidation then it is not a great thing. It will probably try to base out again for a long while. It could even break down.

It has been in a bit of a base. If it broke out above $60 it could be quite bullish. It looks like around $40 is the floor if it breaks to the downside.

*Short* Not a valuation call, but a call on retail, and one in particular. Even management has guided towards lower earnings, lower margins and lower revenue. Struggling from a retail perspective, and retail in general is struggling. Thinks retailers are attractive Shorts overall. (Analysts’ price target is $40.)

*Short* Bricks and mortar is getting killed. There are way more losers in bricks and mortar then winners. This one is a loser. Management is essentially guiding to lower margins, lower EPS, lower revenue and more store closings. (Analysts’ price target is $36.)