Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified

Michael Kors Holdings

(

KORS

) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Michael Kors Holdings as such a stock due to the following factors:

  • KORS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $268.0 million.
  • KORS has a PE ratio of 32.6.
  • KORS is currently in the upper 30% of its 1-year range.
  • KORS is in the upper 25% of its 20-day range.
  • KORS is in the upper 35% of its 5-day range.
  • KORS is currently trading above yesterday's high.
  • KORS has experienced a gap between today's open and yesterday's close of 0.4%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on KORS:

Michael Kors Holdings Limited engages in the design, marketing, distribution, and retailing of branded women's apparel and accessories, and men's apparel. The company operates in three segments: Retail, Wholesale, and Licensing. KORS has a PE ratio of 32.6. Currently there are 10 analysts that rate Michael Kors Holdings a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Michael Kors Holdings has been 4.4 million shares per day over the past 30 days. Michael Kors has a market cap of $16.3 billion and is part of the services sector and specialty retail industry. Shares are up 57.1% year to date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Michael Kors Holdings as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including premium valuation and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 38.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • KORS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.89, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 44.89% and other important driving factors, this stock has surged by 55.72% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • Net operating cash flow has significantly decreased to -$1.16 million or 102.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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