Does it make sense to buy a stock that is up 300%?
If so, I would want to be darn sure about future earnings prospects needed to support a premium valuation.
In the case of AnnTaylor (NYSE: ANN), I'm not convinced that future prospects are secure.
Recently, the company announced cautious guidance suggesting that difficulties will persist through the remainder of the year. This comes in the aftermath of announcing a first quarter loss and decline in same-store sales.
While the competition for women's clothing may be improving, it doesn't appear to be translating directly to ANN.
Again, I ask: "Would you buy a stock like this after a 300% gain?" I think not.
Up next: Consumer stock #5.
Entrepreneur's Journal: Putting together a solid sales contract
The week in preview: Earnings from Walmart, Macy's, and other retailers
Six top trades for the rest of 2009
