Quickly, now, name three states where upscale women's clothing retailers are headquartered. Was Idaho one of them? No? It should have been.
Coldwater Creek (NASDAQ: CWTR) is a specialty retailer of women's apparel, accessories, jewelry and gift items. The merchandise is directed toward the 35 and over group, through some 250 U.S. retail stores. The Sandpoint, Idaho firm also publishes four catalogs and operates a web site. Competitors include Jones Apparel Group (NYSE: JNY) and Liz Claiborne (NYSE: LIZ).
The firm pleased investors last week, when it reported Q1 EPS of 13 cents and revenues of $281.3 million. Analysts had been looking for 9 cents and $264.5 million. Management also boosted Y07 EPS guidance from 55-63 cents to 61-67 cents and FY07 revenues from $1.23-1.27 billion to $1.26-1.28 billion. Two Wall Street brokerages subsequently declared the stock a "strong buy" and three others called it a "buy".
CWTR shares powered through 200-day moving average resistance into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Altogether, brokers now recommend the issue with nine "strong buys", seven "buys", one "hold" and one "sell". Analysts expect a 41% growth rate, through the next year. The CWTR Price to Sales ratio (2.07), EPS Growth rate (30.67%), Return on Assets (10.02%) and Return on Investment (14.18%) compare favorably with sector and S&P 500 averages.
Institutional investors hold about 80% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $16.77 and $31.25. A stop-loss of $21.70 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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