Loaded for Eagle

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I'm one of those investors. I like seeing stocks go down. Don't hate me because I'm cheap. I just happen to know that you make your money in this game on the buy; the lower the price, the better.

So that's why, although I own shares of American Eagle Outfitters (NYSE: AEO), I'm quite happy to see them slide a few percent on the back of today's earnings announcement. Yes, the press-release regurgitators out there are going to be telling us that American Eagle "disappointed" on outlook, or some such nonsense. But don't hate them, either. Their job isn't to know a decent investment, it's to feed the beast.

The briefest look at American Eagle's earnings should be enough to convince you that this is still a company that knows how to create value. Although same-store sales increased only 6% for the quarter, American Eagle's margins crept up anyway, with operating margin up 10 basis points despite deleveraging of distribution and delivery charges.

That's a very fine performance, especially since a couple of tough retail months have clobbered the entire peer group, from Abercrombie & Fitch (NYSE: ANF) to Pacific Sunwear (NYSE: PSUN), and retailers in general. Even Wal-Mart (NYSE: WMT) and Target (NYSE: TGT) have taken their lumps lately.

That said, I don't think American consumers are putting their wallets away completely, and American Eagle is well-positioned on the value end of the teen-fashion food chain.

So go ahead and let Mr. Market freak out about the $0.35-per-share Q2 guidance. With growth initiatives like aerie and Martin + Osa underway, we should expect some margin pressures until the new stores get established. But American Eagle's track record strongly suggests those locations will be contributing in the near future, making Mr. Market's manias look like buying opportunities. American Eagle's board seems to think the same thing, having authorized a buyback of around 10% of outstanding shares.

So please, I'm begging you all. Shoot this stock down even lower. I'm loaded for more Eagle.

American Eagle Outfitters and Pacific Sunwear are Motley Fool Stock Advisor recommendations. A free trial will let you find out why.

Wal-Mart is a Motley Fool Inside Value recommendation.

At the time of publication, Seth Jayson had shares of American Eagle Outfitters but no positions in any other company mentioned. See his latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.