Competitor Comparison: Which Teen Retailers Are a Buy?

Teenagers can be the ideal consumers. They aren't yet burdened by the financial obligations adults face, they're drawn to self-expression, and their impulse-control, well, often leaves something to be desired. All of those help explain how teenagers spend $200 billion a year -- and why retailers love them.

Although teen spending dropped during the recession, teens are spending between 6% and 8% more this year than they did last year. Retailers are also reporting that teens, who were focusing more on staples than premium items last year, are less price-conscious this year.

All of that may mean it's time to check out the industry.

Getting into the numbers
Who are the major teen retailers and how do they stack up to one another?

Data from CapIQ, a division of Standard & Poor's, and the Motley Fool CAPS database.
*Free cash for the fiscal year ended 2009.

It's important to keep track of revenue, but free cash flow gives us a better sense of what the company is doing with that revenue -- and whether it'll have the funds to invest in the business later. Comparable store sales track demand across existing storefronts, backing out any expansion or contraction in the number of stores.

Our CAPS community of investors likes dELiA*s, despite the screwy name, poor comparable store sales, and lackluster free cash flow. Why? Zero debt, decent gross margins, increasing revenue, and an underdog position that gives it room to grow.

Which teen retailer do you like and why? Let us know in the comments below.