Some days, you have to love the market. Like today. Yes, I'm one of those people who, perversely enough, has a big appetite for red. That's because I love getting shares on sale, and I think there might be a few good bargains appearing today. Despite good-looking sales results, a lot of fine retailers are taking their lumps.
Case in point: American Eagle Outfitters (NASDAQ:AEOS). It has dropped like a rock over the past few days, including this morning, apparently owing to Street dissatisfaction with July sales and earnings guidance.
What's bunching the schizoids' undies today? Horrors! It's same-store sales growth of 17% and overall sales growth above 25%. Oh, and charge them with the further crime of lifting earnings guidance into the range analysts were expecting. You'll excuse me if I laugh openly at the people running screaming for the exits, especially given the trajectory of American Eagle's margins, free cash flow, and dividend. (Hint: The direction is up.)
But beleaguered Eagle fans need not feel alone. Solid sales performances from Guess? (NYSE:GES), Abercrombie & Fitch (NYSE:ANF), and Urban Outfitters (NASDAQ:URBN) have been greeted with the same lack of enthusiasm shown Aeropostale's (NYSE:ARO) crummy report -- a result that deserves a share of what Homer Simpson would call spankerin', in my opinion. (And I hold the stock.)
So rejoice, cheapskates. Mr. Market is giving you a bargain. He may even offer further discounts. He did the same thing on several strong companies late last summer, and by the early holiday season, some of them had offered amazing returns.
For related Foolishness:
- Remember: Only the right trend is your friend.
- See why American Eagle has attracted the attention of one of our savviest resident yield pigs.
- The street sang a different tune in June.
Bad news: The market can be stupid. Good news: You can profit from it! Motley Fool Inside Value can teach you how to spot great companies when Wall Street can't, and snap them up at bargain prices. Sign up today for a 30-day free trial.
Seth Jayson has been hoping for something like this for quite a while. Bring on the red! At the time of publication, he had shares of American Eagle, Aeropostale, and Guess?. View his stock holdings and Fool profile here. Fool rules are here.
