Schultz pointed out that I should look at AEO for the fund. In fact, I have. I am avoiding retailers like the plague right now. Especially anyone who is not Walmart or Target (and unfortunately neither of those are Pittsburgh based).
That being said, I think that AEO is a decent buy right now, if you're willing to wade through the shark infested retail waters. I will be shocked if their market value does not increase from where it is now over the next year. They are a company that still has some growth left in them but is already paying a dividend. Additionally, their P/E ratio at 6.24 makes them a rare company that could be looked at by either growth or value investors. Because of that, I don't think they are a bad investment.
However, I think that we'll start to see retailers turn around long before it's too late to get in the game (making momentum trades possible). Consequently, if I had to make a trade with AEO it would be a stop trade, probably at around $11.25. It hasn't traded at that level since early October (when it lowered projections), so I think once it hits $11.25 it will be because of a firm upward trend. Will we have lost out on $2 per share, yep. However, I'll sleep better at night knowing that I have some cash in the bank during this recession time. Especially if something crazy happens.
BTW, there is a similar story to be told about Dick's.
9 months ago