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Jones Apparel Group (JNY), which I first wrote about on December 15, 2009, at a price of $16.56, remains a retail play whose shares are likely to continue to move upward. Here's why:Jones Apparel is a multi-brand apparel and accessories company that operates at both the wholesale and retail levels.
The company has done an admirable job cutting costs, closing underperforming stores, and eliminating redundancies, while focusing on its core brands: Jones New York, Anne Klein, Nine West, Gloria Vanderbilt, and l.e.i.
Look for a 1-2% sales increase in 2010 with JNY, boosted by a better second half of the year. What's more, further consolidation in the retail sector should provide more opportunities for market share gains for Jones in 2011 and 2012.
The First Call FY2010/FY2011 EPS estimates for JNY are $1.33 to $1.55. Each EPS estimate appears to be a tad low, according to my analysis.
Technically, Jones Apparel's stock corrected in November/December 2009 after nearing $20. A move below the key, 50-day moving average was a concern, but the stock has rebounded and pushed back above the 50-day MA.
2010 Outlook: I view Jones Apparel as a long-term play, but if investors are looking to sell JNY within the year, it's probably best to take your profits after it rises to $23-24, if it fails to rise above $25.
Stock Analysis: I consider Jones Apparel Group be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in JNY now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 50% of my JNY position before April 2010 and I'd put a sell/stop loss at: $8.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Look for a 1-2% sales increase in 2010 with JNY, boosted by a better second half of the year. What's more, further consolidation in the retail sector should provide more opportunities for market share gains for Jones in 2011 and 2012.
The First Call FY2010/FY2011 EPS estimates for JNY are $1.33 to $1.55. Each EPS estimate appears to be a tad low, according to my analysis.
Technically, Jones Apparel's stock corrected in November/December 2009 after nearing $20. A move below the key, 50-day moving average was a concern, but the stock has rebounded and pushed back above the 50-day MA.
2010 Outlook: I view Jones Apparel as a long-term play, but if investors are looking to sell JNY within the year, it's probably best to take your profits after it rises to $23-24, if it fails to rise above $25.
Stock Analysis: I consider Jones Apparel Group be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in JNY now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 50% of my JNY position before April 2010 and I'd put a sell/stop loss at: $8.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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