As a man, I cannot conceive paying $200-$400 for something that will hold my money, cell phone and a few personal items. However, many women (my girlfriend included) love to accessorize themselves to death and at no small cost. This is why Coach (NYSE: COH) is more of a phenomenon than a company in my eyes.

1. Coach is arguably one of America's few venerated lines of luxury.
2. The brand is a distinguishing factor. Nowadays, the accessories you rock are as important as the clothes on your back.
3. Sales have surged and the company projects 2005 sales at over $1.7 billion for the full fiscal year ending July 2, 2005.
4. Some of America's largest institutions and mutual fund owners, including Morgan Stanley and Fidelity, own nearly 90% of the company. Believe me when I say these juggernauts won't let their investment plunge.
5. Coach is expanding its horizons, extending the product line to include men's accessories, sunglasses and shoes. Coach is also expanding its retail presence, with an increasing number of retail stores popping up worldwide.

1. Many on Wall Street love the stock; unfortunately, love is not always everlasting.
2. Coach is valued at over $12 billion. Quite the price for a company that takes colored fabrics and makes bags out of them.
3. Insiders have sold around one million shares since early January 2005. There are a lot of good reasons for management to sell their shares, but expectations that the stock is going to go up in the future is not typically one of them.
4. Coach is likely a fad. In fashion, what's hot today may not be tomorrow.
5. Sara Lee used to own the company. Sara Lee makes bread pudding.

Pink, khaki, gold, leather, suede, tote, wristlet, hobo. We wear them to work and to play. They've got us covered winter, spring, summer and fall. They prove versatile and people have been coveting them since 1941. Coach handbags and accessories are in and have been for decades. But how's the stock doing? Let's take a peek:

1. Coach keeps a tight leash on its brand image. That's why consumers are willing to shell out over $300 for a Coach bag.
2. Coach designs luxury products that are clean-lined and simple, appealing to a wide range of consumers.
3. The company has an aggressive international growth plan that has resulted in approximately 186 retail locations and 80 factory stores in over 18 countries outside the U.S.
4. The retail industry is making a comeback and investors of companies offering quality products (like Coach) will reap most of the benefits.
5. At the end of its third fiscal quarter (April 2, 2005), Coach managed to increase earnings by 53%.

1. Fashion is fickle. Coach has enjoyed a longer than average streak and what goes up inevitably must come down.
2. The company has a market cap exceeding $12 billion, putting it into the stock category of large cap. Stocks that fall into this category typically have already seen a large part of their total growth and are now considered mature.
3. Many analysts consider the retail industry to be overextended as it is.
4. Consumer discretionary items (such as accessories) are considered "secondary products" in economic terms. This means that the performance of this sector is directly linked to consumers' disposable income. When the economy takes a hit, for any reason, consumers tighten their budgets by getting rid of secondary products first.
5. Coach is in the process of moving their domestically manufactured accessories into foreign "lower-cost" markets. While this may please shareholders initially, will it please them in the long run? Only customers' demand for quality will be able to tell.
 

Sources: news.moneycentral.msn.com; coach.com; corporte-ir.net; money.cnn.com; finance.yahoo.com