Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of trend-conscious retailer American Eagle Outfitters (NYSE: AEO) climbed as much as 11.1% this morning under heavy trading volume.

So what: Takeover speculation is fueling the fire under American Eagle today. A private equity deal would make sense thanks to a strong brand and plenty of cash-generating muscle, according to Wall Street analysts.

Now what: The company generates more than $300 million of annual operating cash flow like clockwork but sports both thinner income margins and slower sales growth than most rivals including Urban Outfitters (Nasdaq: URBN) and Aeropostale (NYSE: ARO). It's also considerably cheaper than Urban Outfitters and comparable to Aeropostale, and it keeps a squeaky-clean balance sheet with no debt but plenty of cash. No clothing retailer is rich enough to buy American Eagle outright, so any offer would have to come from private equity suitors. In other words, don't expect much of a bidding war.

Interested in more info on American Eagle Outfitters? Add it to your watchlist.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool owns shares of Aeropostale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.