Based on the aggregated intelligence of 130,000-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 

Headquarters (founded)

Van Nuys, Calif. (1988)

Market Cap

$182 million


Apparel, accessories, and luxury goods

TTM Revenue

$36.2 million


Chairman/CEO Robert Margolis (since 1995)
CFO Russell Riopelle (since 2004)


Cherokee, Sideout, Carole Little, All That Jazz

Return on Capital (average, last three years)


Dividend Yield




CAPS members bullish on CHKE also bullish on

Johnson & Johnson (NYSE:JNJ)
General Electric (NYSE:GE)

CAPS members bearish on CHKE also bearish on

General Motors (NYSE:GM)
Citigroup (NYSE:C)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 419 of the 438 members who have rated Cherokee -- some 96% -- believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars Smittyh and MagicDiligence, both of whom are ranked in the top 20% of our community.

Three weeks ago, Smittyh tapped Cherokee as a seductive short-squeeze candidate: "The company has plenty of cash, no debt, and is making a reasonable profit, and the short ratio is over 30 days."

In a pitch from two days ago, MagicDiligence took a more detailed look at Cherokee. Below is an excerpt, but be sure to check out the entire analysis here:

Cherokee is strictly a brand licensor. It owns the Cherokee, Sideout, and Carole Little brands (among others), which it licenses to selected retailers. The company does no product design, no production sourcing, and no marketing - this is left to the licensees. In effect, Cherokee replaces private label brands for these licensees. This is what's known as a "light" business model, requiring next to no capital investment and little expenses save for paying the few employees and maintaining the brand trademarks in various countries. Every dollar invested into capital spending returns several hundred percent in earnings (return on tangible capital).

There's no problem with Cherokee's financial health either. There is almost 14 million in cash on the balance sheet, and no debt. Free cash flow margin has averaged 42% or higher over the last 5 years. The company doesn't horde this cash... it pays out nearly all of free cash as dividends, currently sporting a dividend yield over 10%. The dividend alone makes Cherokee an attractive investment candidate.

What do you think about Cherokee, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 130,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Johnson & Johnson is aMotley Fool Income Investorpick. The Fool's disclosure policy always gets a perfect score.