Today’s new recommendation is a momentum growth stock from Cabot Top Ten Trader.
“Chico’s FAS, Inc. (CHS, $19) is a mid-sized retailer (market cap of $3.1 billion) that aims its string of over 1,250 stores at specific sectors of the female clothing market. All of these stores sell private-branded apparel accessories and related products.
“The company’s more than 600 Chico’s-brand stores (plus 90 outlets and monthly catalogs and website) aim at fashionable women 30 years and older. The White House|Black Market chain of over 380 boutiques and 35 outlets sells exclusive fashions that appeal to higher-income women 25 years and older. The Soma Intimates segment sells lingerie, loungewear and beauty products at more than 185 boutiques and 15 outlets. The Boston Proper line is a direct-to-consumer retailer that sells ‘daring, modern fashion with a sensual feel’ through catalogs, direct mail and online, and the company plans to start testing stores for this brand this year. Investors like Chico’s for its focus on clear demographics and its record of positive earnings growth. The company’s recent success has allowed it to maintain an active program of share buybacks. Recent earnings reports have beaten expectations; the company will likely release Q3 numbers in late November.
Technical Analysis
“CHS built a six-month base under resistance at 16 from late February to late August before gapping up above 18 on August 22. Since then, the stock has been trading in a range between 18 and 19.5 on calm volume. With its 25-day moving average now flat and the rising 50-day just pushing above 18, CHS looks buyable right here, although a dip to below 18 would represent an attractive entry point. Suggested Buy Range: 16-18. Cabot’s buy range is valid for two weeks.”
- Michael Cintolo, Cabot Top Ten Trader, October 22, 2012