Earnings are ratcheting up for this retailer. Janney recently upgraded the shares to “buy”, and Mad Money’s Jim Cramer has called it “the cream of the crop.”
Urban Outfitters (URBN)
from Cabot Top Ten Trader
Until recently, Urban Outfitters (URBN) had been in a transition phase as it tried to meet the demands of its increasingly younger customer base. Its latest quarter suggests the company is starting to adapt.
Same-store sales improved 6% in the fourth quarter, the company’s first such increase in a year. Under the direction of new president Trish Donnelly, Urban Outfitters is trying to reclaim its “older” (college-aged and 20-somethings) demographic, appealing less to the 14- and 15-year-olds who don’t have as much cash to spend on embroidered rompers and Timberland boots.
It seems Donnelly’s strategy is working. The company is introducing new clothes aimed directly at 18- to 28-year-olds. As a result, the company reported its first billion-dollar sales quarter and its highest earnings per share ($0.60) since before the recession.
Investors swooped in after Urban’s earnings were released, pushing shares up 14% in the four trading days following the release. A new stock buyback program of 20 million shares should only help sweeten the pot on Wall Street.
The earnings-driven gap up from 39 to 45 recently lifted URBN out of a six-month rut in which shares had fallen 30% since last September. Since falling all the way to 28 in November, URBN hadn’t managed to break higher than 38 until last week. Now it’s suddenly at a new all-time high. With momentum fully on its side and all technical barriers left in the dust, there’s nothing standing in the way of this stock going on an extended run.
Buy on the dips and watch it push further into record territory.
Suggested Buy Range: 43.5-45
Suggested Loss Limit: 38-39
Michael Cintolo, Cabot Top Ten Trader, www.cabot.net, 978-745-5532, March 16, 2015