The DJIA is long overdue for a correction. There are a ton of stocks with little growth that have high multiples because they pay a 3% dividend. Take MCD for instance. MCD grows roughly 5-6% YOY and has a multiple of 19 all because it is considered a "safe haven" and provides the investor a yield. I believe some of this is due to the low yielding bond markets. This is the "Bernanke Bid" that inflates stocks, and has investors worried.
The 30 stocks which comprise the DJIA have little to do with KORS which is still in hyper-growth mode. A firm growing like KORS deserves a rich multiple (see LNKD, NFLX) until its growth slows. KORS is trading like growth has already slowed to 20% and that is where the opportunity lies. KORS growth will not slow to that level for a few years.
Nobody knows if KORS is going up or down in the shrt term. But, 6-18 months from now this stock will be a double at least.
Q, right on!
These huge conglomerates with tiny growth but decent yelds are in favor as bonds are yielding next to nothing, when rates recover (probably years) they will fall but in the meantime they should appreciate.
Whats happening to KORS makes no sense but this is the third time as there were 3 SPO's.
Here's a fact, March 2012, 13 months ago we were at 50.69 & then wham the first SPO. In this market & with all this growth KORS remained stagnant. Sure we hit the 60's & the 30's but we are in a protracted base due ONLY to lack of confidence due to excessive insider selling. As soon as this is resolved we will be off to the races.
Stocks, like water always find their level.
When I read your posts and try to digest them as best I can I find myself making comparisons,. The one that came to mind is Under Armour, when it went public the stock movements were filled with will it execute, will it be able to compete with Nike, will professional outlets find their products better than current sportswear. Going through that period with UA feels the same as Kors today when you eliminate the insider selling mess. That period in time with UA was not fun but it did pay off with the proper willingness to let it develop.