A Technical Look At 4 High-End Retailers
High-end retailers sport some of the most respected brands in the world, but what do they offer investors?
There are four names, in particular, worth watching.
From a purely technical perspective, Michael Kors appears to have support at the October low of $68.55. Below that, additional projected support would not come into play until below $65.
If support holds, however, technicians believe Michael Kors shares can make it up to Fibonacci retracement resistance beginning at $80.96. With resistance and support nearby, it seems like an attractive reward-to-risk ratio on a long-side trade.
Fundamentally, the company has a very clean balance sheet and a mix of expensive and cheap valuation metrics. This appears to be more of a technical play right now, though, both from a single stock as well as a sector perspective.
Ralph Lauren Corp (NYSE: RL) shares have ripped higher after completing what looks like a nearly perfect “abc” downside correction during the mid-October market troubles.
Now, the stock is overbought on the daily chart and is bumping right into horizontal line resistance at $175.74. Even if shares maintain their overall bullish lean going forward, it would be perfectly normal to see a pullback in price to around $166-$167.
The pattern, however, is far more bullish than that of Michael Kors.
Fundamentally, the company sports a price-to-earnings ratio of 17 versus estimated EPS growth of 15 percent or so for 2015 -- not overly pricey for a retail stock.
The balance sheet isn't as pristine as Michael Kors', but it's still respectable.
Overall, this chart paints a fairly neutral picture of the high end consumer and points out that retail companies' operations are a huge factor in stock market success.
Coach Inc's (NYSE: COH) stock chart is more reminiscent of Michael Kors' chart than Ralph Lauren's. This chart also does not paint a pretty picture of the high end consumer.
Like Michael Kors, however, the stock may already be washed out and ready for a bounce. The stock has key support at $32.46 on the weekly chart and has multiple layers of resistance starting at the recent peak of $37.60.
Kate Spade & Co (NYSE: KATE) shares appear, technically speaking, to have completed an “abc” downside correction on the daily chart back in October; they've been in rally mode since.
Support comes in at current levels around $29.89 and has “gap fill” support at $28.33 and $26.92. Resistance comes in at the horizontal lines of $31.89 and $33.88.
Fundamentally speaking, this company appears to be the most expensive and has the shakiest balance sheet metrics of its three aforementioned peers.
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