Capri Holdings Limited (CPRI): A Bull Case Theory

Yahoo

29-05-2025

We came across a bullish thesis on Capri Holdings Limited (CPRI) on Substack by Paul Cerro. In this article, we will summarize the bulls' thesis on CPRI. Capri Holdings Limited (CPRI)'s share was trading at $17.33 as of 21st May. CPRI's trailing and forward P/E were 5.74 and 23.75 respectively according to Yahoo Finance.
A luxury apparel store, showcasing the high-end brand offerings.
Capri Holdings (CPRI) recently announced the divestment of Versace to Prada for $1.375 billion—a notable step down from its 2018 purchase price but still a strategic win for investors betting on the deal. Despite the anticipated stock rally post-announcement, shares faltered due to the reintroduction of steep tariffs under Trump, particularly a 145% rate on Chinese goods, which significantly impacted sentiment around CPRI, whose Michael Kors and Jimmy Choo brands rely heavily on Asian manufacturing.
Still, this tariff pressure is seen as unsustainable. The belief is that Trump will be forced to reverse course, either by market pressure—such as rising 10-year Treasury yields—or pushback from corporations, as was the case with his 90-day pause on electronics tariffs. Capri's now net-cash position, excluding operating leases, strengthens the investment case.
Even after paying down $1 billion in debt, the company could still hold $250 million in cash, providing flexibility for reinvestment, buybacks, or further deleveraging. This financial pivot, paired with the sale of a loss-making segment, positions CPRI for re-rating—especially once tariff-related overhangs ease. While the core brands (KORS and CHOO) aren't the most exciting in isolation, the improved balance sheet and optionality create an attractive setup. Investors see a path for a 25%+ move from current levels once macro risks subside. With no imminent catalyst but strong structural improvements in place, the stock is viewed as a mispriced asset in the wake of temporary geopolitical noise, setting the stage for significant upside as clarity returns.
Capri Holdings Limited (CPRI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held CPRI at the end of the fourth quarter which was 57 in the previous quarter. While we acknowledge the risk and potential of CPRI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CPRI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.