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12:22 pm
January 26, 2012
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Jae Jun
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although I hold ARO, it's a tough position to be in.
Buying a retailer based on fundamentals has not worked out well for me to date. Unless there is another huge overreaction, I personally won't be buying. I just don't have that high conviction for retailers anymore. More difficult to analyze and predict than tech imo.
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7:17 pm
January 25, 2012
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Graeme
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matthew said:
My only concern is their owners earnings FCF has been reduced from 2010 level and it looks like this next annual report will have a lower FCF than 2011, which is the first time FCF has decreased for them in two consecutive years.
Yeah, I dunno about this one. No moat, crummy product, no reason why they should succeed over any other lower-mid clothing brand (which are all popping up in value screens.) The FCF decrease is probably a symptom of the whole. And if you're going for a $22 valuation, the current price isn't much of a margin of safety. Too many hurdles. Maybe a small call option ending in 2013 or Jan 2014 in case they hit a homerun.
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2:28 pm
January 25, 2012
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matthew
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I know its been a while since Aeropostale has been discussed but I just thought I should bring this stock up again since it seems very cheap. I have already done a report on it and have valued it at $22. I think with P.S. from Aeropostale and growth opportunities from international markets they will have a good opportunity for growth, especially when the economy improves.
They just released a lower EPS expectation than analyst expected for the 4th quarter. Therefore, in the short run I am expecting them to go a bit lower. If it were to hit around the $13 level, I would consider buying it.
My only concern is their owners earnings FCF has been reduced from 2010 level and it looks like this next annual report will have a lower FCF than 2011, which is the first time FCF has decreased for them in two consecutive years.
Regards,
Matthew McLennan
For anyone who is interested the link for the report I created is here: http://fundamental-stockanalys…..gspot.com/
Click on the scribd link for the report
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10:55 am
May 13, 2011
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somrh
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I'd be reluctant to write calls on ARO. I'd kick myself if there was a buyout offer for a decent premium and I'd be stuck having to sell my shares for dirt cheap.
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9:44 am
May 13, 2011
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Jae Jun
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cant do much about timing but surely ARO can move up a bit from $20 by 2013.
ARO may actually be a good one to use for a covered call dont you think seeing as how it is unlikely that it will fall below $20
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8:07 am
May 10, 2011
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somrh
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Thanks for the links. I will check those out.
I ended up closing out my position at $23 (lucky) in order to buy ARO 2013 calls and free up some cash. I figure there isn't too much risk that it'll tank much below the $20 strike price my calls are at and I now have more upside potential (provided it goes somewhere by Jan 13). Unfortunately my call purchase wasn't as lucky as my sale as I watched the stock price tank some more. Oh well.
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9:32 pm
May 9, 2011
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Jae Jun
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Seeing as how I held AEO during 2008 – 2009 when it was falling, ARO was doing the exact opposite during that stage. But now that it has come down to reasonable levels, I see the company as fundamentally stronger than AEO. Better management all round.
Whopper Investments did a lot of work that you can review.
http://whopperinvestments.blog…..ector.html
http://whopperinvestments.blog…..-part.html
Happy to let this one sit and wait.
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11:44 am
May 7, 2011
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somrh
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Since this is one of yours Jae and since there was some recent (negative) news I thought I'd start this thread. Any thoughts on this?
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