"A late Easter and a rise in Cotton prices has led to some bargains in Retail Apparel stocks"

Dow Jones Industrial Avg. 12,380 (UP) Week ending 04-08-2011

We have all heard about the meteoric rise in the price of Cotton. Demand is steady and in high volumes to China, India and Pakistan.

What the newsmen have not told you is that demand for cotton has actually dropped by 7 million bales since 2006.  This is similar to another commodity, Oil , where speculation has driven the price higher, while worldwide demand is leveling off.

As we have all seen in the housing market, speculation or what Alan Greenspan called "Irrational exuberance," eventually comes to an end and prices return down toward the "mathematical mean" price.  When this happens with cotton, it will be a windfall to some well run apparel retailers.  Easter being late in April this year is also going to create soft sales numbers for apparel retailers for their Q1 2011 number comparisons to Q1 2010 figures. Q2 numbers on the other hand, should be excellent comparisons. Here are a few names that should benefit from this phenomena. I would buy them now and hold into the Christmas holiday.
    

Aeropostale Inc. (Symbol ARO, $25.62)  even without cotton prices  going down currently has a Return on Equity of 49.2%. ARO also has a 5 year sales growth of 15.31% and 5 year earnings growth of 31.85%. Sometimes you need to shop in the off season to get investment bargains. Don't forget that this stock's share price is up 91.51% over the last 5 years.



Limited Brands Inc. (Symbol LTD, $37.17)  is projecting 2012 earnings of $2.31 and 2013 earnings of $2.64 per share. LTD has  Return on Equity of 42.5% and offers a too reasonable dividend of 2.15%. This stock has a three year total return of 132%. March sales have been surprisingly strong against lowered expectations with a backdrop of unusually cold weather, bubbling gasoline prices and the shift of Easter into April.

Urban Outfitters Inc. (Symbol URBN, $30.91) is a company to like for a lot of reasons. 2012 earnings are projected at $1.74 per share and for 2013 looking like $2.08 a share. Urban has a great balance sheet with a Current ratio of 3.81 to 1 and has no long term debt.
 This company with a 5 year sales growth  rate of 16.15% is a real bargain at this "off the rack" price. These three are all quality investments; a piece of the puzzle.

These are 8 month investments, so don't worry if they bounce up and down in price between now and then.
 Just pick one out and go with it.

Freewilly

Eat Well >> Feel Well, ... Look Well >> Feel Well , >> ... Make money?

Dow Jones 10,012, (down),(DJI day low Friday 9,835), week ending 02-05-2010

My daughter Molly told me last week that she feels good on the days that she shops at these two stores, Whole Foods Market Inc. (Symbol WFMI) and Urban Outfitters Inc, (symbol URBN). So I thought that I should check out these businesses to see if they were good investments. I thought that if people have an emotional bond or response with a shopping experience that they certainly would visit that store again. She is in the 25-30 female demographic and I would think that they are vibrant shoppers.

Urban Outfitters offers lifestyle merchandise through four brands: Urban Outfitters, Anthropologie, Free People, and Terrain. While the majority of sales come from the retail segment, which includes over 300 stores, catalogs, and the Internet, a portion comes from the wholesale division. Urban Outfitters targets young adults aged 18 to 30 through its unique merchandise mix and compelling store environment. So are they a good investment? Well the 12 month total return was 85.3%. 5 year projected earnings growth of 22.2% and 5 year projected sales growth of 18%. Those numbers work for me. It has corrected a little bit here so jump in at will.

The Whole Foods Market Inc. story, "Back in 1980, we started out with one small store in Austin, Texas. Today, we’re the world’s leader in natural and organic foods, with more than 270 stores in North America and the United Kingdom". Their mission: "Whole Foods — We search for the highest quality, least processed, most flavorful and natural foods possible because we believe that food in its purest state — unadulterated by artificial additives, sweeteners, colorings and preservatives — is the best tasting and most nutritious food there is". Invest now? Whole Foods has a 12 month return of 125%. They are a supermarket though, and their paltry 1.80% net profit is considered high in the supermarket industry. So for this Green++ rated company, that says it will have 16-17% growth in sales and earnings, I would say to look for a lower price entry point to buy in.


So what are us older age 55-65 Boomer demographic buying? Izod shirts, which are owned by Phillips-Van Heusen (Symbol PVH) and the new Chocolate Cheerios from the General Mills Company, (Symbol GIS). I would rate PVH a strong buy and GIS a moderate buy here.


If you're bored with all this shopping talk and just want to stay home, you can pick up a deal on Xilinx,(Symbol XLNX), here, which designs, develops and markets complete programmable logic solutions. The stock is selling for $23.17 and is projected to earn $1.75 a share next year, not bad numbers. Strong buy.

So check out the store or product you love, and see if their numbers make sense!

Freewilly