There is virtually no end of shops offering fashions for young women and the number of stores catering to the older crowd is on the rise, but where do you go for haute couture and you are eight? There is an outfit headquartered in New Albany, Ohio that has an answer.
Tween Brands (NYSE: TWB) is a specialty retailer that features apparel for tween girls (ages 7-14). The stores also carry such items as purses, watches, backpacks, jewelry, footwear, bedroom furnishings and age-appropriate cosmetics. The firm operates 583 Limited Too shops and 221 Justice outlets, in 46 states. It was spun off from former parent, Limited Brands (NYSE: LTD), in 1999.
The company pleased investors earlier in the month, when it boosted earnings forecasts on the basis of quarter-to-date
operating results and expected benefits from a newly authorized stock repurchase program. Management now sees Q3 EPS of 43-47 cents (42 cent consensus), Q4 EPS of $1.03-$1.13 (97 cent consensus) and FY08 EPS of $1.84-$1.98 ($1.84 consensus). Susquehanna Financial subsequently upgraded the stock to "positive" and Friedman Billings reiterated its "outperform" rating. The news popped the shares out of an early September "cup" into the mid-September "handle" of a Cup & Handle formation. The price is now showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle."
Brokers recommend the issue with two "strong buys," three "buys" and eight "holds." Analysts see a 26% growth rate, through the next year. The TWB P/E ratio (16.18). PEG ratio (1.01), Price to Sales ratio (1.01), Price to Book ratio (2.85), Price to Cash Flow ratio (9.95), Return on Assets (11.53%) and Return on Investment (14.34%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $27.23 and $49.00. A stop-loss of $27.70 looks good here. Note that the firm is expected to report Q3 results in mid-November.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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