timwest
Short

Michael Kors -KORS -Daily -Sell Rally to 84-85, 82.2 last

NYSE:KORS   MICHAEL KORS HLDGS LTD
355 1 7
Ramping higher every quarter until the recent selloff into the latest earnings report. Note how well the "Key Hidden Levels" defined the bottom of the range in the recent decline!

The stair-step climb to ever higher levels is interrupted now, but I don't want to miss shorting it at $84-$85 for a return to $76-$77 for a low risk, high reward trade.

The valuation of KORS is extremely high and is based on their strong sales growth and profitability over their lifecycle. However, if you had to purchase the company outright here, then you would likely never earn your money back from owning/operating the company. At almost 5 times sales, you have to pay $5 for every $1 in sales that the company generates. I think in the long run, the odds are stacked against the stock doing well. I'm not saying it wont do well, just that I think the odds are better that KORS will be neutral to lower and the way to trade it from here is from the short side.

Sell over 84-85, target 78-76. Risk 3 pts to profit 6-9 pts.

Tim 11:54AM EST 82.23 last, but wait for 84-85 entry zone.



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timwest PRO
2 years ago
Crazy, insane valuations like this one often do come crashing back to earth. At least it is down to about 2x's sales, now, but it could fall to 1.5x's or 1.0x's and still be expensive. The consumer is having trouble. Their houses need improvements and their cars are very old so the savings from lower crude oil prices are going into home improvements and new cars and to a less degree people spending on faux-rich-fashions like KORS. This is the cruelty of capitalism, bubbles and bull markets.
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