5 Reasons to Buy This Great Stock

The Buckle (NYSE: BKE  ) has already had a good year, in terms of both stock and business performance. The share price is up 13% since the beginning of 2012, and revenue has increased 6% year to date. With that sort of run-up, investors need to pay extra attention to ensure that the time for growth hasn't passed. Here are five reasons that I think Buckle is still a solid buy for the long-term investor.

Solid profits
Although revenue has increased at Buckle this year, last quarter the company actually had a slight dip in operating income. In 2011, it made $36.8 million, while in 2012, it brought in $36.4 million. That's not enough to make me worry, especially since the first quarter was so strong. On a year-to-date comparison, Buckle is ahead of the curve, with operating income of $94.4 million compared to $88.1 million last year.

Sales also picked up in August, increasing 6% to $100.8 million against 2011 sales of $95.3. With August same-store sales increasing 5%, it appears online sales are still helping to stimulate growth. Year to date to August, same-store sales increased 4%, even with the 1% dip in the second quarter. All that has put Buckle on a clear path for the rest of 2012.

A clear path
The end of the year is obviously the big game for retailers, and especially for apparel retailers. Not only are the holidays on the way, but kids are going back to school and college. That means that retailers need to shine if they're going to be the hot item for the holidays. Buckle is in a good position to do this, and plans to extend its reach by opening an additional two stores before the end of the year. That will bring the total store count to 441.

Buckle is also planning an October promotion this year, and a push in its women's line that should help bump sales in the right direction. It's up against a strong 2011, though, when cooler weather may have helped sales, so look for a positive turn in growth but nothing earth-shattering in the third quarter.

Investor payout
Buckle is a strong dividend payer, and was recently recommended by Fool retail specialist Austin Smith. Yesterday, the company announced its second-quarter dividend of $0.20 per share. That's in line with its dividend last year. It's currently yielding a 1.7% dividend, which puts it ahead of competitors like Gap (NYSE: GPS  ) , which currently yields 1.4%. Buckle also has a history of issuing big one-time dividends, with a $2.25-per-share dividend in 2011, and a $2.50-per-share issue in 2010. Now might be the best time to invest in Buckle, to lock down any potential special dividend and to beat the Oct. 15 deadline for the normal dividend payout.

Fair price
That brings us right into the cost of owning Buckle. Luckily, it still comes in at a fair price, with a forward P/E of only 13. That puts it in line with other steady growers like Gap, which has a forward P/E of 15. While this is indicative of limited growth expectations, it also keeps investor risk low. Combined with the potential dividend payout, long-term Buckle investors are looking at a very nicely priced stock.

Excellent people
Finally, I want to talk about the people who are behind Buckle. CEO Dennis Nelson joined the company in 1970 as a part-time salesman. Since then, he has risen through the ranks to CEO. The best part about this is that Nelson's story is not atypical. The board of directors and executive list is full of people who joined the company in sales roles. Over 50% of the executive committee has now been with the company for more than 10 years. This is a company that values its employees, and promotes from within.

The bottom line
Buckle is a strong retailer and a good dividend payer. The cost to get in is low, but investors get a long, solid, growing company to add to their portfolio. From my perspective, Buckle is still a strong buy, even with the growth that it has seen this year. If you need a few more solid portfolio pieces, check out the Fool's free report "The 3 Dow Stocks Dividend Investors Need." The report is free, and you can click here to get your copy today.

Fool contributor Andrew Marder does not own any of the companies mentioned in this article, even though he really likes Buckle, and keeps meaning to buy it. Motley Fool newsletter services have recommended buying shares of The Buckle. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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