Best stock to buy: Michael Kors Holdings Limited (KORS) engages in the design, marketing, distribution, and retail of branded women’s apparel and accessories, and men’s apparel. The Company operates its business in three segments: retail, wholesale and licensing. The 30-yar-old fashion brand has experienced a favorable fiscal quarter as whopping growth in sales.
The global luxury lifestyle brand Tuesday released its financial results for the first quarter ended June 30, 2012. Revenues surged 71% from $243.1 million a year ago to $414.9 million. Operating income came in at $111.9 million, an increase of 149% compared to $45.0 million in the same period of last year. The company posted net income of $69.6 million, or 34 cents per share, based on 199.4 million weighted average diluted shares outstanding, representing an increase of 161.54% compared to $24.1 million, or $13 cents per share, based on 179.2 million weighted average diluted shares outstanding.
The good results were due to the strong performance of the company’s retail, wholesale and licensing segments. In North America, our comparable store sales rose 38.4% reflecting the strong appeal of the Michael Kors brand. Wholesale segment saw a growth of 66% driven by what the company called continued conversions to shop-in-shops in department stores. Licensing segment also enjoyed a growth of 61%, led by strong sales in the Michael Kors watch line. Michael Kors also grew comparable store sales by 24.2% in Europe where the company is still relatively new. The company also intended to open stores in Japan earlier this year.
As of June 30, 2012, Michael Kors had grown retail stores to 253, from 177 at the end of the same period last year. Including 68 additional retail stores, including concessions, operated through licensing partners. The company totally had 321 stores globally.
For Q3 2012, Michael Kors is targeting EPS of 33 cents to 35 cents on revenue of $490 million to $500 million, exceeding the consensus expectation of 29 cents on revenue of $422 million, respectively.
In addition to the company’s strong financial performance, an accumulative increase of 146.95% in its price since the company’s IPO on December 15, 2011 is another reason why KORS stock is viewed as one of the best stock at this moment. The latest stock price of 49.39 on August 15, 2012, is 110.08% above its 52-week low of $23.51 and 2.56% off its 52-week high of $50.69. The stocks is trading above its 50-day moving average of $41.32 and 200-day moving average of $33.16. The average daily volume is strong at 2.88 million shares.
According to the data provided by FactSet Research, nine analysts averagely gave a “Buy” rating and set an average target price of $54.89 on the best stock. This implys a 10.84% upside potential for the current stock price level.
On the basis of the latest closing price, Michael Kors has a market cap of $9.45 billion.