Exploring Momentum Investing: Is Tapestry (TPR) a Top Pick?
Momentum investing is an investment strategy that aims to profit from the continued growth of stocks that have been trending upwards. The rationale behind this strategy is that once a stock starts to gain momentum, it is more likely to continue doing so due to various positive factors such as strong earnings, positive analyst sentiment, and increased investor interest. In this article, we will evaluate Tapestry, Inc. (TPR), the New York-based luxury fashion house, to determine if it has the potential to be a top pick for momentum investors.
Strong Earnings Growth
- Tapestry reported strong fiscal Q4 2022 earnings, with net sales increasing by 21.8% year-over-year (YoY) to $1.8 billion.
- EPS came in at $1.12, surpassing analyst estimates of $0.99.
- The company’s revenue growth was driven by the strong performance of its three core brands: Coach, Kate Spade New York, and Stuart Weitzman.
Positive Analyst Sentiment
- According to data from FactSet, Tapestry has an average price target of $68.44, representing a potential upside of 11.5% from its current stock price.
- The company currently has a “Buy” rating from 12 out of 18 analysts, according to Yahoo Finance.
- Analysts cite Tapestry’s strong brand recognition, solid earnings growth, and successful turnaround strategy as reasons for their positive outlook.
Increased Investor Interest
- Tapestry’s stock has experienced strong price momentum in recent months, with the stock price up by approximately 25% YoY as of March 2023.
- The company has been gaining traction among institutional investors, with its institutional ownership increasing from 55.5% in Q3 2021 to 57.2% in Q4 2022, according to Yahoo Finance.
- The strong institutional interest in Tapestry is a positive sign, as institutional investors typically have more resources and expertise to identify promising investment opportunities.
Impact on Individuals
For individual investors, Tapestry’s strong earnings growth, positive analyst sentiment, and increased investor interest make it an attractive momentum investment opportunity. However, it is important to note that momentum investing carries inherent risks, such as the potential for sudden price drops if the momentum reverses. Therefore, it is important for investors to conduct thorough research and consider their risk tolerance before making any investment decisions.
Impact on the World
From a broader perspective, Tapestry’s strong financial performance and momentum could have positive implications for the luxury fashion industry as a whole. The company’s success in turning around its brands and adapting to changing consumer preferences is a testament to the resilience of the luxury fashion industry, even in the face of economic uncertainty and shifting consumer trends.
Conclusion
Based on our analysis, Tapestry appears to have what it takes to be a top pick for momentum investors. Its strong earnings growth, positive analyst sentiment, and increased investor interest make it an attractive investment opportunity. However, it is important for investors to carefully consider their risk tolerance before making any investment decisions. From a broader perspective, Tapestry’s success could have positive implications for the luxury fashion industry as a whole, demonstrating the resilience of the sector in the face of economic and consumer trends.
Investing always carries risks, and it is important to conduct thorough research and consider seeking advice from a financial advisor before making any investment decisions. This article is for informational purposes only and should not be considered as investment advice.
Stay tuned for more insights on the world of finance and investing. Until next time, happy investing!
