Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, apparel brands licensor Cherokee (Nasdaq: CHKE ) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Cherokee's business and see what CAPS investors are saying about the stock right now.
Cherokee facts
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Headquarters (Founded)
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Van Nuys, Calif. (1988)
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Market Cap
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$148.3 million
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Industry
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Apparel, accessories, and luxury goods
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Trailing-12-Month Revenue
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$31 million
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Management
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CEO Henry Stupp (since 2010)
CFO Mark DiSiena (since 2010)
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Return on Equity (Average, Past 3 Years)
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53.8%
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Cash/Debt
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$8.8 million / $0
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Dividend Yield
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4.8%
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Competitors
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Gap (NYSE: GPS )
Nike (NYSE: NKE )
V.F. Corp (NYSE: VFC )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 96% of the 558 members who have rated Cherokee believe the stock will outperform the S&P 500 going forward. These bulls include euroazn and cbaines2.
Just last month, euroazn tapped Cherokee as a potent income opportunity: "It's undervalued, and it pays a fantastic dividend of slightly under 5% (and this is a cut dividend. What if it goes back up again ... yum)."
Cherokee even boasts an almost unbelievable three-year average operating margin of 60.6%. That's substantially higher than that of listed foes like Gap (12.3%), Nike (13.1%), and V.F. Corp (12.5%).
Last September, CAPS member cbaines2 elaborated on the bull case:
Cherokee is a fabulous yet relatively unknown franchise. Their business model is as simple as apple pie: Collect royalty revenue and then distribute it to shareholders in the form of a dividend. Cherokee practically makes money out of thin air through licensing popular clothing brands to Target and other major retailers. A whopping 18 employees (not a typo) generate[d] $13.7 million in free cash flow [in fiscal 2010].
What do you think about Cherokee, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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