Retail Investments: List of Back-to-School Stocks

(List compiled by Becca Lipman)

It’s that time of year again…

Back to school sales are here, and with them a fierce price-slashing competition amongst retailers.

According to the National Retail Federation, spending on back to school wardrobes are expected to drop this year as consumers become more fiscally conservative in the current political and economic climate. Furthermore, the NRF predicts consumers there will be participating in more sales, price comparative shopping, online shopping, and have a greater tendency to buy generic store brands.

For large retailers, this data makes the art of back to school shopping a bit more interesting.

In something akin to a popularity contest, teen-based retailers such as Abercrombie, American Eagle, and Aero are willing to do just about anything to make sure their hoodies and tees, bearing their logos, are paraded in school hallways for another year.

To stay on top, these companies are willing to cut prices so low as to notably impact their profit margins.

According to Dee Gill of Y charts this price-slashing profit-minimising tactic presents a potential opportunity to investors:

“The picture of these big companies facing short-term trouble should peak interest from value investors. A well-managed, financially stable retailer will weather a difficult season. Any wobble in the share price may be a good chance to pick up shares in companies likely to rise with a general economic recovery.”

Interested in exploring this idea? Use this list as a starting point for you own analysis.

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1. American Eagle Outfitters, Inc. (AEO): Apparel Stores Industry. Market cap of $2.34B. Current price at $11.3. The stock is currently stuck in a downtrend, trading -15.38% below its SMA20, -13.12% below its SMA50, and -22.11% below its SMA200. It’s been a rough couple of days for the stock, losing 8.75% over the last week. American Eagle Outfitters is a specialty retailer of all-American casual apparel, accessories, and footwear for men and women between the ages of 16 and 34. As of January 29, 2011, it operated 929 American Eagle Outfitters stores, 148 aerie stores, and 977 kids stores.

2. Abercrombie & Fitch Co. (ANF): Apparel Stores Industry. Market cap of $6.16B. Current price at $64.76. The stock has gained 82.83% over the last year. The company sells casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, and outerwear; personal care products; and accessories under the Abercrombie & Fitch, abercrombie kids, and Hollister brands. As of January 29, 2011, the company operated 1,069 stores in North America, Europe, and Japan.

3. Aeropostale, Inc. (ARO): Apparel Stores Industry. Market cap of $1.03B. Current price at $12.26. The stock is currently stuck in a downtrend, trading -27.32% below its SMA20, -29.6% below its SMA50, and -46.24% below its SMA200. It’s been a rough couple of days for the stock, losing 24.33% over the last week. Aeropostale, Inc. operates as a mall-based specialty retailer of casual apparel and accessories. The company primarily targets 14 to 17 year-old young women and men through its Aeropostale stores; and elementary school kids between the ages of 7 and 12 through its P.S. from Aeropostale stores. As of January 29, 2011, the company operated 965 Aeropostale stores, consisting of 906 stores in 49 states and Puerto Rico and 59 stores in Canada, as well as 47 P.S. from Aeropostale stores in 13 states.

4. Gap Inc. (GPS): Apparel Stores Industry. Market cap of $9.22B. Current price at $16.11. The stock is currently stuck in a downtrend, trading -14.81% below its SMA20, -12.43% below its SMA50, and -21.19% below its SMA200. It’s been a rough couple of days for the stock, losing 13.17% over the last week. The Gap, Inc. operates as a specialty retailer. The company offers apparel, accessories, and personal care products for men, women, children, and babies under the Gap, Old Navy, Banana Republic, Piperlime, and Athleta brands. The company operates stores in the United States, Canada, the United Kingdom, France, Ireland, Japan, China, and Italy. It also has franchise agreements with unaffiliated franchisees to operate Gap and Banana Republic stores in other countries worldwide.

Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


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