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Bianca pick chopped, replaced
Rating: 1.86 (7 votes)
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It should have been the perfect pick because it met all of our criteria, and we got it at what our research showed was a really good price. We even waited for the earnings report - which helped bring the price down - so it should have been a guaranteed money maker. But it wasn't. That is the risk with fashion. What's in can be out in a flash as Heidi Klum says so brutally to Project Runway contestants. Aeropostale (ARO) is gone. Its fate was sealed when Bianca did her back-to-school shopping. We've just been waiting for a good day to sell it, and today was it. Out with ARO, in (maybe) with AEO, American Eagle Outfitters. It's way under its 52 week high, Morningstar gives it great grades: Growth A- Profitability A+ and Financial Health A+, and the chairman just bought 848,500 shares of his own stock. Piper Jaffrey and Thomas White/Global Capital (that Starmine rates as 95% and 94% accurate on their calls on the stock) say "Buy", and Piper Jaffrey upgraded it recently. The StockScouter report says "Shares are under heavy accumulation by financial institutions. Positive for large companies like AEO" but they also found the stock price very volatile. "Very negative" So American Eagle Outfitters is not a perfect 10 - but Aeropostale didn't turn out to the perfect 10 it seemed to be when we bought it. Warned on stock price fluctuations - and expecting a drop with October (if not sooner) selling by people who bought when AEO was trading in the 30's - we've set a purchase price of $23.75, just a tad higher than its most recent low, but lower than the $23.83 to $24.25 that the chairman paid. We'll let you know when we get it. P.S. Bianca's other fashion pick is less of a disappointment than it was when we told you about it. It's inched out of the bottom third of our purchases, it's in the black, and Christmas is coming. P.P.S. Take my word for it - never buy stock in a fashion company without taking a fashionista to the mall first. I still can't see much difference between the Aeropostale mini jean skirt and the American Eagle Outfitters one, but it is crystal clear to Bianca. We should have switched stocks the day she made her skirt purchase. | ||
