Dressed for Success: A Trio of Apparel Retailers

"But right now, the company is getting a boost from the good earnings news from competitor Talbot), which reported earnings on April 13 and surprised to the upside with both Q4 results and projected sales for 2010. Investors are betting that strength will show up again when AnnTaylor reports on May 17.

"After a big off-the-bottom run in 2009, ANN topped out near 18 in September, then began correcting. The stock bottomed in January at 12, then gapped up in February, beginning a rally that continues today, despite a drop to the 25-day moving average earlier this month. It looks buyable around here, with a stop around 19.

"We are also seeing strength in Philip-Van Heusen,. The old-time shirt company? Yes! Phillips-Van Heusen traces its roots back more than a century. Its history includes the introduction of collar-attached shirts.

"But it's no sleepy old shirt-maker. It's an expertly managed global company that has grown by acquiring valuable brands; in the past two decades it's snapped up Calvin Klein, IZOD, Arrow and Bass. And now it's in the process of a $3 billion acquisition of Tommy Hilfiger.

"On top of that, the company's fiscal fourth quarter earnings, announced back on March 22, were spectacular, easily beating analysts' estimates as management contained costs while consumer demand returned.

"Revenues were down 4% last year, thanks to the recession, and earnings slipped 4% as well, but the firm stayed solidly profitable and this year business is booming ... and the Tommy Hilfiger deal is the icing on the cake.

"The firm pays a small dividend, and its market capitalization of $3.3 billion might be considered low. PVH's chart showed nothing special until it became clear about six weeks ago that consumers were shopping again.

"The kickoff saw the stock break above resistance at 45, and a week later, the fourth quarter earnings news shouted the good news to the world.

"Since then, buyers have been in firm control of the stock, with no pullback lasting longer than two days. You could buy a little here, but we prefer waiting for a normal pullback. Our recommend buy range is 58-62.

"We can't say that woman's retailer Talbots is the highest- quality retail stock in this market, but it's joining in on the fun thanks to an encouraging earnings report last week.

"The company's top line is starting to turn around, albeit slowly; revenues were down 3% in the quarter ending January 31, but January same store sales were up in the high single digits, well above expectations.

"The big story is with earnings, where, thanks to good inventory and expense management, the company turned solidly profitable in the quarter and expects growth from here. (Earnings estimates for this year have been hiked to 67 cents per share from 51 cents before last week's report.)

"CEO Trudy Sullivan is the stemwinder here, and she looks to have successfully updated the company's offerings and boosted the brand. It's a solid story.

One lesson to remember is that, when a stock etches a very deep base (40% to 50% or more), it usually needs at least a few weeks up near its old highs before it's ready to make a decisive upmove.

"TLB is a good example-it suffered a drop from 12 to 6 late last year, then a rally back to the 12 area in early February. But the stock then needed about two months of quiet trading (a sign of accumulation) before the breakout came.

"And the breakout has been great! Frankly, we think you could buy a little here, but we'd prefer getting shares on a dip of a few percent. Our suggested buy range is 14-16."

Steven Halpern's TheStockAdvisors.com offers a free daily review of the favorite stock ideas of the nation's top financial newsletter advisors.