Michael Kors Holdings Ltd: This Luxury Brand Has Impressive Upside Potential

Michael Kors Holdings Ltd (NYSE:KORS) is doing wonderfully well today as it gained 0.90 % to trade around $97.60 per share. The current share price shows a 4X multiplication of the stock’s $25 IPO price in December 2011.

KORS stock chart

The bullish momentum is sustained today after the company beat analysts’ expectations once again with its Q4 and Fiscal 2014 earnings. Kors continued to surge with a profitability that saw revenue soaring by 53.6% to $917.5 million. You will remember that third quarter revenue surged by 59% to cross the $1 billion mark.

Three Reasons Impressive Upside Potential

  1. Michael Kors Caters to Rich Shoppers of Luxury Goods

One of the reasons Kors will continue to soar in the foreseeable future is its unique market positioning as a high-end fashion retailer. The company continues to court and attract rich shoppers who have more discretional income at their disposal. The success recorded by luxury jeweler, Tiffany & Co. (NYSE:TIF) and Kors’s successful drive in the recent quarters show that luxury shoppers will continue to drive outperformance in the sector. By contrast, Coach Inc. (NYSE:COH), which is positioned as a lower-end retailer has been taking a serious drubbing in recent quarters.

  1. Michael Kors Has A Strategic Long-Term Vision

The second reason that will drive outperformance in kors is the company’s strategic long-term vision to become a major player in the global luxury retail market. Kors store count as at the end of the fourth quarter was 555, Kors reported that it added 133 of those stores in the first three quarters of this fiscal year. 395 of the stores are company-owned and the remaining 138 stores are licensed. Kors plans to double the number of its stores over the next couple of years in order to control a larger market share of luxury retail sector.

  1. Kors Has Built An Impressive Reputation Around Its Brand

The third reason the share price of Kors cannot but rise it the strong reputation built around the brand. For one, Michael Kors is known as the luxury brand that has high-end luxury apparel and accessories for both men and women. Many high-end luxury brands usually cater to either of the sexes, hence, kors is the de-factor choice when gender-complementary apparel and accessories are needed. More so, Kors is known for its “affordable” luxury lines that provide luxury products without hefty price tags that could require you to break a bank.

How to Trade KORS Options

KORS has been the target of upward estimate revisions because of its recent bullish form and possibilities down the road. For instance, KORS has a Zacks number 3 “Hold” rank and analysts at Wedbush now have a $108.00 price target on the stock. Analysts at Cowen and Company reiterated their “outperform” rating and they has a $111.00 price target on the stock. Morgan Stanley initiated coverage on the stock with a $117.00 price target.

KORS is cruising and the RSI of 60.47 suggest that the buying action is still in the early stages.  I find it hard not to go bullish on this stock; hence, I recommend the KORS Nov 2014 105.000 call (KORS141122C00105000)

Photo: Nic Taylor Photography via photopin cc

— Daily Option Alerts

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