The Motley Fool's CAPS investing service is one of the newest additions to the investing community at Fool.com, and it's another great way for investors to work together to beat the market. One of the features in CAPS allows users to set up a blog to talk about their picks, investing strategy, market view, or what they just had for lunch (if they so desire).
I've scoured through some of the most recent blog posts in the CAPS universe to bring you some of the great content CAPS players are putting out.
Is Coach a buy?
Our first blog of the day comes from jmkinsey, who gives us some thoughts on perennial purse powerhouse Coach
Is Coach a buy? And I do not mean the actual accessories, because they are almost always a buy. That, however, is what is so compelling about the stock. I like to think of myself as a relatively fashion conscious female, and I love Coach's accessories. I even own a few. I have friends who own many, including dog accessories. What more can you say about the iconic status of a brand when it becomes necessary that pets wear the brand as well as their owners?
The point is, Coach is one of those brands that everyone strives to own, because it is a "status" brand. All the cool kids have something Coach. One of the great things about status brands is their resilience when the economy is not so hot ...
I think it gets better than that, though. The forward P/E ratio on Coach is 24, which is slightly higher than the industry average, but with earnings expected to grow over 30% in the next year that is reasonable, and maybe even cheap. The net profit margin for Coach was 24% last year, quite a bit higher than the 9% industry average. Return on assets and equity are also both better than the industry averages. The company has very little debt, and free cash flow per share of $1.20. All told, that is a pretty good picture for the company and the stock.
My resistance point? Coach is up over 68% in the past nine months, since I first started watching it. While that makes me slightly cautious about the stock, it did take a big hit when it announced earnings for the quarter because it cut a business unit (corporate accounts) which caused the company to slightly lower expectations for this year... So, while the stock is up substantially, it has pulled back recently and if I was going to buy it, I would do it now. This is not a stock that will double your money soon, but is perfect for a long term holding.
Is Coach a buy? I say yes.
For more thoughts from jmkinsey, you can read her blog here.
Something smells in the Avanir
The second stop this week brings us to All-Star drugncover, who, not surprisingly, brings us thoughts on a drug stock. Though Avanir
[Avanir] had the good idea of combining two drugs that enhance each others effect as a way of reducing the dosage of a key drug (dextromethorphan I believe) needed to get a clinical effect. Unfortunately, when you load two drugs into the same elimination mechanism, you not only increase effective plasma levels somewhat synergistically, but you sometimes get synergetic increases in adverse events. If you want to see a company that is doing this strategy well (even if their stock is killing me) check out CombinatoRx
Anyway, the bad side effects for Avanir showed up in their first study, in IEED (a weird indication, which I won't go into right now) as a change in QTc, which indicates potentially serious cardiovascular adverse effects. The FDA told them "no way will we let this through at this dose," and that they would have to repeat the tests with lower doses ... the stock crashed.
A month later, they publish from their second trial, this time in neuropathic pain (much better indication!) which is highly positive! Seems good right? Maybe redeemed? Except they did not analyze the safety database yet, so bad things could be hiding, and this test was done with the exact same dose the FDA already rejected. In other words, it does nothing for them, except to attract a bunch of momentum player[s] who drive the stock over six bucks.
The outlook for Avanir is continued on drugncover's blog, which you can find here.
CAPS 5-star portfolio rebalance
To conclude, I wanted to introduce everyone to the CAPS5StarIndex. This is a portfolio set up to track the success (or failure!) of the five-star stocks on CAPS. The index was started in November of last year, and at the beginning of each month, the portfolio is rebalanced to knock out stocks that are no longer rated five stars and add those who've gained the rating.
The portfolio is currently within the top 20% of all CAPS players as far as rating. Perhaps more impressive, though, is the fact that with its 1,140 points, this five-star index ranks in the 100th percentile of all CAPS players in terms of raw score. You can read more about this month's rebalancing by visiting the CAPS5StarIndex blog.
Now it's your turn -- get off the sidelines, join CAPS, and start up your own CAPS blog to share your own knowledge and insights with the rest of the CAPS universe.
Fool contributor Matt Koppenheffer shares some thoughts of his own on his CAPS blog. He does not own shares of any of the companies mentioned. The Fool's disclosure policy does not have its own CAPS blog, but if it did, it would blow your mind.