We've all heard the expression "got its wings clipped," and everyone knows that those of us who write about American Eagle Outfitters
In what appears to be a relief rally sparked by a favorable weekend write-up in Barron's, shares are soaring once again. Markets around the world may be bleeding red today, but the Eagle is flying up more than 8% in the first half of today's trading.
Could a simple magazine mention really be the reason for AE's shares soaring? The evidence strongly supports this theory. As it turns out, three other retail clothiers mentioned in the article as potential private equity targets -- Ann Taylor
Not that I expect investors to complain about the flimsy basis for their good fortune. Nor the folks at Motley Fool Stock Advisor, where we have recommended AE for investment (along with Gap, by the way). And I'll complain least of all. To the contrary, whatever the source of AE's rise, I wholeheartedly agree with the move. AE has been too cheap, for too long, to fail to rise at the slightest hint of a catalyst. Even after this morning's surge, the stock sells for a mere 11.6 times trailing earnings -- cheap when compared to the 14% annual profits growth that analysts expect it to produce over the next five years.
Long story short, this rebound was long overdue.
Fool contributor Rich Smith does not own shares of any company named above. Nor, per The Motley Fool's disclosure policy, can he buy shares in any named company for at least the next 10 days. Gap is an Inside Value selection. American Eagle and Gap have been recommended by Stock Advisor. The Motley Fool owns shares of American Eagle.