Adults. They just don't understand.

At least, that's what it seemed like when we were in high school. Eventually, we came to respect the wisdom of our elders -- mostly when we became the elders. But when Wall Street recently sent a bunch of teen retailers to detention, our high school angst came screaming back to the surface.

We've recently seen retail report cards riddled with red marks for everyone from Abercrombie & Fitch (NYSE: ANF) to Aeropostale to American Apparel (AMEX: APP). Tentative, price-sensitive consumers and higher costs are hitting the retail class of 2011 hard.

Still, we got seriously huffy when the Street wrote off The Buckle (NYSE: BKE) like it was just another juvenile delinquent that decided to skip class. When the company failed to live up to analysts' expectations, the Street overreacted by taking away the company's car keys and grounding the stock, which caused shares to sink 13%. As of right now, the shares are down about 10% since the beginning of May.

Oh em gee, Wall Street! If we still lived with our parents, we'd roll our eyes, stomp loudly down the hall, slam our bedroom doors, and play cassette tapes of our friends' punk bands at deafening volumes. Instead, we did the age-appropriate thing and videotaped a hissy fit to broadcast online.

The 411 on teen retailers (do the kids still say that?)
We get it -- it's not easy for us adults to tell which cliques are hot or not in the teen retail space. So grab your lunch tray, pull up a chair, and we'll give you a tour of who's who and what's what.

  • First, the "bad boy" of the teen retail pack: American Apparel. With the company on the verge of bankruptcy -- and the CEO in the doghouse for multiple sexual harassment suits -- we're not comfortable bringing this company home to introduce to our portfolios.
  • American Eagle Outfitters (NYSE: AEO) was once with the "in" crowd. The company has spent a small fortune trying to jazz up its look, but store makeovers haven't panned out as planned. Plus, it's all but dateless for the prom: In March, CEO James O'Donnell announced he would be leaving the company to retire after a replacement is named.
  • Over at Abercrombie & Fitch, customers are starting to notice that clothes are getting a bit spendy. Blame rising cotton prices (which companies can either add to the price tag, or eat by lowering margins). The whole "padded bikini tops for preteens" publicity didn't help the company's reputation, either.
  • Pacific Sunwear (Nasdaq: PSUN) is in perpetual detention. It hasn't turned a profit in three years.

This brings us to The Buckle (formerly The Brass Buckle, back in our heyday).

Teenage fan club
So what happened in May? The haters couldn't help themselves. Like Gretchen says in Mean Girls: "I'm sorry that people are so jealous of me ... but I can't help it that I'm so popular."

Sure, Buckle missed analysts' quarterly expectations -- by two cents. Yet during that same time, Buckle's total sales and net income grew nearly 12%, and same-store-sales increased more than 8%.

Not a bad quarterly report card, right? That's because the Buckle isn't like other teen retailers:

  • Buckle doesn't have to invent or interpret trends from whole cloth. Because it carries lines from other brands -- like Guess, Fossil, Hurley, and Betsey Johnson -- it has the luxury of being able to pick what it thinks will work for its customers.
  • It has an air of exclusivity. When we talked to actual young people (two young cousins of a co-worker), they gushed about the Buckle, pointing out that the selection stood out from other mall retailers. At Buckle, they get graphic T-shirts and slightly edgy, less-preppy styles. And they know that they won't see the same thing on 20 of their friends.
  • You want numbers? How about these numbers? Buckle's operating margins are double Abercrombie's and American Eagle's, and it's got $161 million in cash and no debt.

Buckle earned the title of "Most Likely Teen Retailer to Succeed Over the Long Term" for its performance in 2008 -- one of the worst times for consumer stocks. During that time, Abercrombie & Fitch and American Eagle's same-store sales dropped double digits. Buckle's increased more than 20%.

It's not too surprising that Wall Street types could have a tendency to not only forget what it's like to be a teen and screw up when investing in teen retailers. After all, everything that came out during the financial crisis indicated that a lot of them had actually forgotten what it's like to be a human being.

Take a hint from us, though, and take advantage of myopic responses to some stocks. That's how you find winners in sectors where the negativity is painted with a far broader brush than the one we used to apply our makeup for this video.

We won't sulk for too long, since this recent quarterly miss amid a lot of teen retail stock panic gives us a shot at buying Buckle shares at a moment of temporary weakness. Like, OMG!

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