To buy this week? -- Chico's (CHS)
There are a few stocks that I'm interested in adding to my portfolio now that I haven't yet purchased -- still hemming and hawing a bit, for different reasons.
Chico's (CHS) is at the top of that list. This is probably the best apparel retailer in the country in terms of repeat customers, sales growth, and well-managed expansion. I have been wanting to buy in for a long time, my Mother and Wife shop there as often as they can and by all accounts this is among the more popular retailers for baby boomer women -- which happens to be a pretty big demographic. Their product is still very differentiated, which I think is key for retailers, and they definitely have a unique image and marketing approach -- their salespeople offer great service in my experience, and the catalog is beautiful and definitely stands out in the stack of mail.
But they've been growing so fast there haven't been any times this year that it looked like they were going to give a bargain entry point. It appears that Chicos is so successful that they might never to give us a nice cheap entry point again ... so what's an investor to do? I'm no techical analyst, but the chart looks nice -- up and up and up -- as long as you already own the stock (don't be fooled by ADVFN's mistake in the chart on the right, they had a 2:1 split, not a 50% drop in price back in the end of February). Are there any down times coming for me to buy?
Well, they have pulled back by almost 20% from their highs, so that's promising and maybe a dip worth buying on. But the thing holding me back right now is that they report tomorrow and their great success has led analysts to continue raising estimates over the past several months -- average earnings estimates are I believe up to 27 cents EPS now for the quarter. I'm holding out hope that when they report earnings tomorrow afternoon they will disappoint by one or two cents so I can get a somewhat better price to buy in.
I could, of course, be left watching it climb further if earnings beat estimates, but in this case I'll take the chance, even though Chico's has reported great summer sales so far -- Chico's doesn't routinely (recently, at least) blow through estimates, even though growth is very good, in part because the analysts have been pretty aggressive about keeping up. If they just meet estimates and stay more or less flat I'll still likely buy in, perhaps by selling some of my Sears Holdings shares in exchange for a better (and more comprehensible) retail growth story in Chicos. Chico's forward PE is about 27, which is awfully close to their growth rate. In a market that is starving for growth, this stock is making a lot of people, including me, salivate. Now if only everyone else will poor-mouth retail stocks tomorrow and Chico's please please has a slightly underperforming quarter, then I might get myself a nice bargain. Will let you know.
Good Chico's article from the Fool is here.
Chico's (CHS) is at the top of that list. This is probably the best apparel retailer in the country in terms of repeat customers, sales growth, and well-managed expansion. I have been wanting to buy in for a long time, my Mother and Wife shop there as often as they can and by all accounts this is among the more popular retailers for baby boomer women -- which happens to be a pretty big demographic. Their product is still very differentiated, which I think is key for retailers, and they definitely have a unique image and marketing approach -- their salespeople offer great service in my experience, and the catalog is beautiful and definitely stands out in the stack of mail.
But they've been growing so fast there haven't been any times this year that it looked like they were going to give a bargain entry point. It appears that Chicos is so successful that they might never to give us a nice cheap entry point again ... so what's an investor to do? I'm no techical analyst, but the chart looks nice -- up and up and up -- as long as you already own the stock (don't be fooled by ADVFN's mistake in the chart on the right, they had a 2:1 split, not a 50% drop in price back in the end of February). Are there any down times coming for me to buy?
Well, they have pulled back by almost 20% from their highs, so that's promising and maybe a dip worth buying on. But the thing holding me back right now is that they report tomorrow and their great success has led analysts to continue raising estimates over the past several months -- average earnings estimates are I believe up to 27 cents EPS now for the quarter. I'm holding out hope that when they report earnings tomorrow afternoon they will disappoint by one or two cents so I can get a somewhat better price to buy in.
I could, of course, be left watching it climb further if earnings beat estimates, but in this case I'll take the chance, even though Chico's has reported great summer sales so far -- Chico's doesn't routinely (recently, at least) blow through estimates, even though growth is very good, in part because the analysts have been pretty aggressive about keeping up. If they just meet estimates and stay more or less flat I'll still likely buy in, perhaps by selling some of my Sears Holdings shares in exchange for a better (and more comprehensible) retail growth story in Chicos. Chico's forward PE is about 27, which is awfully close to their growth rate. In a market that is starving for growth, this stock is making a lot of people, including me, salivate. Now if only everyone else will poor-mouth retail stocks tomorrow and Chico's please please has a slightly underperforming quarter, then I might get myself a nice bargain. Will let you know.
Good Chico's article from the Fool is here.
This article posted by One Guy @ 8/24/2005 05:45:00 PM 0 comments
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