School is about to start again soon, and that means that back-to-school shopping is in full swing. With that in mind, along with some other reasons, Janney Montgomery Scott has initiated coverage on several retailers with "buy" ratings.
Janney gave details on each of the retailers it studied. The analyst cited Abercrombie & Fitch's (NYSE: ANF ) price competitiveness on desirable brands, increased sales, and margin contribution internationally. Zumiez (Nasdaq: ZUMZ ) gets a nod because of its prospective gross margin expansion with its varied blend of popular brands, and Talbots (NYSE: TLB ) as well for margin expansion, product enhancement, and viable positive comps in the next year.
Janney noted strong performance in recent years from J. Crew (NYSE: JCG ) , along with continued robust traffic and conversion trends, and also expressed confidence in the products and management of the company. A solid customer base paired with long-term growth were sturdy marks that put Urban Outfitters (Nasdaq: URBN ) in the "buy" slot, with Ann Taylor (NYSE: ANN ) being cited for continually better products and improvement in recent and prospective earnings.
Sure, the "buy" retailers are happy to receive these positive notes, but what does that mean for you?
We've enlisted our Motley Fool CAPS to evaluate the performance of Janney Montgomery Scott and to help you make a call on these retailers.
Analyst report card
On CAPS, we evaluate how Wall Street analyst picks perform relative to the market using publically available information on their calls. In order for an analyst firm's buy or sell rating to be accurate, the stock must outperform or underperform the S&P 500. Janney Montgomery Scott's picks outperform the market a respectable 52% of the time, and Janney Montgomery Scott's performance is in the top 15% of all stock pickers measured by Motley Fool CAPS.
Retailer report card
|
Stock
|
Current CAPS Rating
(out of 5)
|
Last Rating Change
|
Total Outperform vs. Underperforms
|
|
Abercrombie & Fitch
|
*
|
2 stars to 1 star, Nov. 20, 2009
|
800 vs. 347
|
|
Zumiez
|
***
|
4 stars to 3 stars, Oct. 27, 2009
|
782 vs.56
|
|
Talbots
|
*
|
1-star rating since first rated in August 2009
|
141 vs. 274
|
|
J. Crew
|
**
|
1 star to 2 stars, Feb. 9, 2010
|
314 vs. 84
|
|
Urban Outfitters
|
***
|
2 stars to 3 stars, July 22, 2010
|
563 vs. 104
|
|
Ann Taylor
|
**
|
1 star to 2 stars, March 17, 2010
|
174 vs.83
|
We have DISAGREEMENT!
Wall Street cites all of these six retailers as "outperform" stocks by a margin of at least 5-to-1, and many contributors from our CAPS community also believe that the majority of these stocks will outperform. However, in aggregate, the CAPS community sentiment isn't as strong for these stocks as it is with other outperform opportunities. In particular, CAPS members rate Urban Outfitters and Zumiez as the best stocks in this group, with both earning three stars.
CAPS member blink182fan marks Urban Outfitters as an "outperform":
Urban Outfitters is one of the best functioning retail companies out there. When the recession hit they leaned up their inventories quickly to deal with lower demand. Additionally they maintain a strong and conservative balance sheet well suited for the weak environment around it. When consumer confidence really kicks back, wouldn't you want a lean mean retail machine? If you do, look no further than URBN.
And CAPS member kayceygirl makes the bull case for Zumiez:
I tend to be somewhat conservative but looking for 3 things at this point in my investing:
1. Stability & Strength
2. Yield and Modest Growth
3. Strong Position within a sector regardless of whether the entire sector is strong or not. Each sector has to perform to some degree for the whole world economy to function.
I am looking for 5 or more years down the road, ROI, and Growth. Not looking for rockets, just stars. This is a Star!!
Make your vote count!
Do you agree that these retailers will outperform the market? Click over to CAPS and let the rest of the community know what you think.
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