“Rare Retail Stock Makes Zack’s Rank Breakout”

By Travis Johnson, Stock Gumshoe, March 31, 2008

I rarely write about Zack’s as an investment advisory, mostly because they don’t usually “tease” their stock ideas. But today they did — I got an email from a reader about the latest stock to make a Zack’s “breakout” move … and they’d like you to subscribe to their service, before March 28th while it’s still “on sale” so you can find out what stock this is.

But of course, fearless reader, your friendly neighborhood Stock Gumshoe will make no such demands on you. Read on!

Zack’s says that this stock is the rare retail stock to make a breakout lately …

“Today, while competitors are sluggish, this company is on fire. Its net 4th quarter income boomed +31.7% on a +18.3% increase in net sales. It has catapulted to a Zacks #1 Rank (Strong Buy) as its earnings estimates continue to rise. We’re inviting you to download this pick via the service that discovered it. Try the Zacks Rank Breakout Trader at a 33% discount that ends Friday night, March 28th. This is only a two-day sale so please don’t wait.”

So … the clues are thin, but is the Gumshoe dissuaded? I think not! The Thinkolator starts cold on this fine March day, but eventually gets going and tells us that this stock is …

The Buckle (BKE)

No, I had never heard of it before, either, even though it’s been public for 16 years. It’s one of those teenybopper clothing stores, not unlike Abercrombie & Fitch or American Eagle Outfitters. And I’ve been burned by fashion and clothing stocks often enough to realize that I can’t pick fashions for my generation, let alone for the 18 year olds out there … so I have no idea how the Buckle’s doing in any broad sense. I’ve never seen one of their stores, not that I’ve been looking.

But Zack’s is certainly right that the numbers look “turnaroundish,” generally speaking — it did have those nice income and sales increases as teased, and it is certainly still small enough that it could easily grow if it’s popular and well managed. They have about 370 stores right now, and they’re not growing the store base so quickly that you’d necessarily worry (Abercrombie operates about a thousand stores for it’s brands, just by way of comparison). Analysts are fairly lukewarm on the company, perhaps because all of these stores are similarly valued and it’s hard to know how they’ll do in a downturn (do teenagers stop begging their parents for money during a recession? Do parents stop giving in? Discuss amongst yourselves — my kids are, thankfully, way too young to expose me to this particular market yet).

So … are you a big Buckle fan? Want to make a bet on a retail revival, either with the Buckle or with one of the other near-value-priced teen retailers? (AEO I’ve almost bought several times, it’s almost painfully cheap with a single digit PE, but I haven’t swum against that particular current just yet).

And are you a Zack’s subscriber … or a big fan or detractor? Let us know. I can’t say that I’ve much experience with their services, but they seem to at least have a broad scope, if nothing else, and they do “guarantee” that they’ll beat the market.


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