How to Make Money Buying Fashion Stocks

The strategy is pretty simple: Buy stocks for much less than they are worth. If you pay $30 for a stock worth $50, it's much more likely that the stock will jump to $50 than fall to $20.

So, how do you know how much stocks are actually worth? You do some research or you take a look at the 5-year average P/E ratio (Price per Earnings) and the 52-week range for a certain stock. There are several websites where you can go and find these statistics, but I like Fool.com and Yahoo Finance for company information.

Let's say we are interested in buying some shares in Coach (NYSE:COH)...we like their bags, we have them in every size and every color and now we want to see if it's a company worth investing in...let's take a look at Coach's 5-year average P/E ratio: It's 34.20. Now, let's take a look at it's 52-week range: 23.22-54.00. Coach's current trading price is $28.32. From these figures, we can see that Coach is currently trading below its value. If we buy this stock right now, by the time it goes back to let's say $50.00, we have made a profit of about $22.00 per share. Multiply that by the number of shares you own and you got your total profit.

The bottom line is that if you like shopping at a certain company, think about investing in it. Do your research and buy when the time is right. Right now, most retail stocks are trading at lower than average prices, so you may want to act now.

Learn more about new fashion products, fashion companies and their stocks at http://fashionstocks.blogspot.com/

Denisse Romero is an educator and a former financial advisor who likes to follow style and financial trends in the fashion industry.