By
Elyse Andrews, Editor of Cabot Wealth Advisory
From Cabot Wealth Advisory 5/14/11
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If you keep up with the news, you probably know that retail stocks have been faring better lately as the economy recovers and consumers start spending again.
Abercrombie & Fitch (ANF) has benefited from that in a big way and the stock shows it!
Abercrombie is known for catering to brand- and fashion-conscious teens and has earned a reputation for pushing the envelope with its racy advertising. But that's not why the stock is hot right now.
The stock is doing well for several reasons.
• Management recently announced that the company should earn $4.75 this year (versus $2.05 in 2011) and that total revenues would likely double to $7.5 billion by 2015.
• A recent report revealed that many retailers' same-store sales trounced analyst expectations. Abercrombie's were up a solid 10%.
• The company plans to open stores in Paris, Madrid, Singapore, Brussels and Dusseldorf. Abercrombie already has 1,000 stores (after closing some that were underperforming, another cause of growth), and this international expansion is sure to open many new markets.
ANF flew under the radar for a long time, but soared in early April on huge volume on news of the guidance hike. It formed a nice base around 70 for about a month after that and the stock broke out again last week after the same-store sales news was announced. The stock is now trading in the mid-70s.
The company reports earnings next week, so getting in just ahead of that could be risky. But if management is right in its bullish outlook, the stock likely has a lot further to run.
You could buy ANF here and hope for the best or you could see what Cabot Top Ten Trader Editor Mike Cintolo is recommending. He's featured ANF recently and subscribers already have a 15% profit in the stock. Click here to learn what he thinks about it now!
Elyse Andrews
Editor of
Cabot Wealth Advisory
Elyse Andrews edits Cabot Wealth Advisory, a free email newsletter that offers independent, no-nonsense investment advice on how to build long-lasting wealth written by Cabot's analysts and editors. Every Saturday, Elyse writes the Weekend Digest, which includes her column and a summary of Cabot Wealth Advisories that readers may have missed during the week. Elyse is also a regular contributor to The
Iconoclast Investor, a blog for Cabot editors and readers to share their views and interact with each other.