Kors is a bargain—here's why: Trader

Why Kors is a bargain: Trader
Trading Nation: Luxury stocks in trouble
Trading Nation: More downside ahead?

Talk about a designer sale.

Shares of luxury retailer Michael Kors sold off more than 23 percent in the past two days and fell to multiyear lows after the company reported its slowest sales growth in more 3½ years.

But one market participant says the stock is a bargain and urges investors to use the selloff as an opportunity to scoop up shares.

"The stock got annihilated [Wednesday] and every momentum investor—which is roughly 50 percent of Kors' shareholder base—just blew out of this name," trader David Seaburg said Thursday on CNBC's "Trading Nation." "But I think there's a trade to the long side here."

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According to Seaburg, "when you look at the valuation of Kors, we're at the point where this stock looks cheap." And when compared to the valuation of rival Coach, he added, "the price of Kors has come down quite substantially." Seaburg noted that Coach's earnings per share growth rate is now down 45 percent versus negative 11 percent for Kors, which creates a compelling buying opportunity.

"I think we're going to see a shift in the investor base from a momentum investor to more of a GARP investor," said Seaburg, head of sales trading at Cowen & Co. "That signifies that we're going to see a change that could push this stock to higher levels."

But Seaburg doesn't think the stock is out of the woods just yet, and despite being up slightly Thursday afternoon, he said there could be additional selling pressure through this week.

Nonetheless, said Seaburg "wait for the selling to end and then close your eyes and buy the stock—we could see some $5 to $10 upside in the near term."

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