Market Update
U.S Market:
- 4th Quarter GDP data down to 2.2% from 2.6% and GPD is expected to be further revised down to 2%
- Auto sales rose in Feb despite poor weather: GM sales up 4.2%; Chrysler sales rose 5.6%
- Dollar continued to strengthen: Hit 11 year-high vs Euro, which fell to $1.1088
- Nasdaq fell below 5000 level on Tuesday
International:
- China lowers growth target to about 7%
- ECB on Thursday is expected to unveil details of bond buying program: 60 billion euro of bonds each month for 18 month
- GDF Suez, a French Energy Company issues 2.5 billion euro of bond including zero coupon bond
- More about zero coupon bond:
- http://www.investopedia.com/terms/z/zero-couponbond.asp
Business:
- J&J is nearing a deal for cancer drug maker Pharmacyclics
- Pharmacyclics has won expanded approval from US health regulators on its breakthrough cancer drug Imbruvica, which is expected to achieve annual peak sales of up to $6 billion
- Shares of Pharmacyclics rose 6.3%
- Abercrombie& Fitch shares down 13.1%, though profit beats expectation
- Germany agreed to pay Airbus 623million euros in loans for the new Airbus A250 wide body jet.
- Airbus has received billions of euro in preferential loans from European government to support the development of new jetliner models.
Stock pitch: Coach (COH)
Overview:
- Founded in 1941 and acquired by Sara Lee Corp. in 1985
- Products: Handbags, Accessories, Footwear, Jewelry, Wearables, etc.
- Main American luxury goods retailer
- Current Price: $41.95
- Market Cap: 11.85 B
- P/E: 20.93
- Debt/Equity Ratio: 2.27
News:
- 2/15/2015: Quarterly cash dividend of 0.33375 over common share
Risks:
- Seasonality
- Global sourcing risks
- Dependency on global sourcing center
- Intellectual property protection
- Popularity of brand and fads
- Consolidation of retail business
Why Coach:
- Coach lost lots of market share in the past years, the slowdown of competitors could mean a chance to gain back what it lost
- New styles reminiscent of recent fashions seen at current shows
- “Brand Transformation” has had positive outcomes on revenue as well as brand perception
- Recent acquisitions give leverage
- Plans to expand into South and Central America, as well as broadening line of men’s products
Suggestion:
- Long term hold for at least a year
Congratulations on our first stock pitch this year!
