Kohl's Gets It Right

According to Bank of America, Kohl's has increased its percentage of private or exclusive-brand goods from 24% to 35% over the past several years. This growth helps the company in several ways. The exclusive brands give shoppers a reason to return to the stores, as they won't be able to find the Elle brand and others anywhere else. Moreover, private-label goods usually carry higher margins, improving profitability.

$100 Stock?

While Kohl's might pride itself on low prices, its stock isn't cheap. Trading at over 19 times this year's projected $3.85 earnings per share, the stock is near the top in valuation in several metrics when compared to its department store peers.

While I always look for a bargain, sometimes in life you get what you pay for. While Kohl's is valued at a bigger premium than most of its peers, it's deservedly so.

Despite the higher valuation, the stock's 17.7% projected long-term growth rate is second only to Bon-Ton Stores (BONT Quote), which has less than half the number of locations. Kohl's trades at a measly 1.1 times growth on a forward basis, far below the group average of 1.5 times growth.

Kohl's plans to add roughly 400 more stores in the coming years. Its already-efficient systems should enable the company to grow profits faster than sales, according to Morningstar.