Retail Apparel Perks Up with Names Not Heard in While

August 25, 2012 /

When good things happen, there’s no point in fighting the trend.

Right now, good things are happening in the Retail-Apparel Shoes Accessories industry group. Stocks are breaking out, mostly among midmarket to upmarket plays.

Pessimists insist this shouldn’t be happening with all the economic problems in the world.

Well, the smart investor bases his or her actions on what is happening, not what “should” happen.

The buoyancy in retail apparel includes stocks that pay dividends.

American Eagle Outfitters ( AEO ) cleared a 21.23 buy point in big volume Wednesday, after some hesitation surpassing that level.

The Pittsburgh-based company is expected to grow earnings 45% in fiscal 2013 ending in January, the best pop in eight years. Revenue is expected to rise 7%, the highest in five years. The Composite Rating is 92. The five-year Earnings Stability Factor is 22 on a scale of 0 (calm) to 99 (wild).

American Eagle pays a quarterly dividend of 11 cents a share. The annualized yield is 2%. The dividend was initiated in 2004, with a payout of 6 cents a share.

Gap ( GPS ), which operates the namesake chain along with Old Navy and Banana Republic, gapped up 13% in huge volume Aug. 2 after clearing a base in tame volume in July.

Earnings are expected to rise 35% in fiscal 2013 ending in January, the best in nine years. The Street expects revenue to grow 6%, also the fastest in nine years.

The Composite Rating is 97. The five-year Stability Factor is 10.
The dividend’s annualized yield is 1.4%. The payout has almost tripled since 2005.

Other dividend payers in this group includeLimited Brands ( LTD ) (87 Composite Rating , 2.1% yield),Foot Locker ( FL ) (97 and 2.1%) andChico’s FAS ( CHS ) (99 and 1.2%).

Some of these names haven’t appeared in IBD for some time. That’s a good thing. New leadership would be most welcome, and that’s what appears to be happening even within the group.

For example, discounters such asTJX Cos. (TJX) andRoss Stores (ROST) were the story in this group for months. Yet, they don’t have the fast-rising Relative Strength lines now.


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