Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, teen-oriented apparel retailer American Eagle Outfitters (NYSE: AEO) has earned a respected four-star ranking.

With that in mind, let's take a closer look at American Eagle's business and see what CAPS investors are saying about the stock right now.

American Eagle facts

Headquarters (founded) Pittsburgh (1972)
Market Cap $2.66 billion
Industry Apparel stores
Trailing-12-Month Revenue $2.95 billion
Management CEO James O'Donnell (since 2003) CFO Joan Hilson (since 2009)
Return on Equity (average, past 3 years) 12.3%
Cash/Debt $514 million / $0
Dividend Yield 3.2%
Competitors Abercrombie & Fitch (NYSE: ANF)
Guess? (NYSE: GES)

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 94% of the 2,381 members who have rated American Eagle believe the stock will outperform the S&P 500 going forward. These bulls include mercyn and All-Star TMF1000, who is ranked in the top 1% of our community.

A few months ago, mercyn wrote that American Eagle "has knack for offering target market what it wants." Our CAPS member concludes: "Stock will climb as economy improves."

In fact, American Eagle sports a particularly attractive dividend yield of 3.2%. That's higher than that of industry peers such as Abercrombie (1.2%), Gap (2.2%), and Guess? (2.6%).

CAPS All-Star TMF1000 elaborates on the bull case:

Investing in retail isn't always easy. I always felt the restaurant part of my portfolio far more stable and much easier to predict, but if you are right with retail the rewards can be very great. ...

[American Eagle] has a very deep customer base. They are cheaper than leader [Abercrombie], so they can't raise prices too much to compensate for higher commodity prices. But higher cotton prices should be a temporary problem.

They are financially strong. They have $515 million in cash and no debt. ...

I think [American Eagle] is a good risk. I think they are developing businesses that will help them compete with others in their industry. And there are those in their industry that aren't doing well and may disappear soon giving them more market to grab. ... I think they are positioning themselves well for the holidays.

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