Old Navy is back!

At least, that's what most media outlets are reporting. According to Associated Press, "the bad economy has been good for the chain's lower-price Old Navy brand, which was retooled last year to resume catering to frugal moms after an ill-fated foray into trendier fashions."

Validea is an intriguing newsletter that selects stocks based on the strategies of the market's most legendary investors. Here, editor John Reese takes a look at Aeropostale (NYSE: ARO).

"This mall-based clothing retailer targets youngsters age 14 to age 17 through more than 900 stores in 49 states, Puerto Rico, and Canada.

"The company has developed a new retail store concept called P.S. from Aeropostale, which will offer casual clothing and accessories focusing on elementary school children between the ages of seven and 12.

There are no sure-fire gains in trading or investing, even if the company's/sector's data is pointing to a move higher or lower. The short of Aeropostale (NYSE: ARO), recommended on May 15, 2009 at a price of $31, has been stopped out at $42, and the short of Burger King (NYSE: BKC), recommended on the same day at a price of $17.35, has failed to make the new lows envisioned.

Aeropostale posted record Q2 results, and recently announced a 9% increase in August same-store sales, despite a cluttered sector (young-teenager casual apparel, accessories), and the "frugal consumer" era.

"With high-quality stocks on sale, now seems an opportune time to look for bargains among small and midcap blue chips," suggests Richard Moroney.

In his Upside Stocks advisory, which uses the quantitative-based Quadrix ratings system, he says, "We've found several 'Best Buys' with superior year-ahead potential."

Here, the analyst looks at Aeropostale (NYSE: ARO), Catalyst Health (NASDAQ: CHSI) and Hornbeck Offshore (NYSE: HOS).

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Aeropostale Inc. (NYSE: ARO) strong Q2 results beat expectations due to rising same-store sales.
• Agilent Technologies Inc. (NYSE: A) Q3 earnings topped low expectations and revenue declined.
• Analog Devices Inc. (NYSE: ADI) posted better-than-expected Q3 results but shares fell on weaker margins.
• Baidu Inc. (NASDAQ: BIDU) CEO said its new advertising efforts will boost sales over the long run.
• Barnes & Noble Inc. (NYSE: BKS) had a better-than-expected Q2 profit but same-store sales fell.
• BJ's Wholesale Club Inc. (NYSE: BJ) reported solid Q2 numbers and raised its full-year guidance.

Aeropostale (NYSE: ARO), a retailer that competes with Abercrombie & Fitch (NYSE: ANF), American Eagle Outfitters (NYSE: AEO), and Gap (NYSE: GPS), posted what I thought was a superb second-quarter earnings summary on Thursday after the bell. The figures were very appealing, and I would've expected a better after-hours reaction by the stock to the news. Then again, the market can never be predicted. It will do whatever the heck it wants.

Net sales increased 20%. Not bad, am I right? Wait, check this out. Earnings per share came in at 57 cents, compared to the 31 cents reported in the year-ago quarter. According to Reuters, that was a penny ahead of expectations. But that penny beat on the bottom line isn't what impresses me the most. It's the strong per-share profit expansion that I find compelling.

Last week we looked at expectations for some retail earnings. More shopping mall favorites are reporting second-quarter results this week, and analysts surveyed by Thomson Reuters are looking for significant earnings growth from some of them.

Aeropostale Inc. (NYSE: ARO), the teen-focused retailer spun off from Macy's (NYSE: M) in 1998, is expected to post a second-quarter profit that is 44.6% higher than a year ago, or $0.56 per share. Revenue for the quarter is expected to be 19.7% higher, or $451.3 million. For the full year, the forecast so far is for $2.98 per share (+25.8%) on $2.2 billion (+14.6%). Earnings of the New York-based company have matched estimates in recent quarters. The long-term EPS growth forecast is 13.9%, which is better than the retail industry average and rival Abercrombie & Fitch Co. (NYSE: ANF). Aeropostale's earnings multiple is 12x, and this debt-free company's cash flow from operations swung into positive territory in the first quarter. The First Call consensus recommendation is to buy ARO; The Motley Fool identified it as a Wall Street favorite. Shares are down a couple of bucks from the 52-week high of $38.74 back in July, but are still 123.0% higher year to date.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Aeropostale Inc. (NYSE: ARO) beat profit expectations as revenue and same-store sales both increased.
• Aruba Networks Inc. (NASDAQ: ARUN) received an analyst's upgrade following its Q3 report.
• Buckle Inc. (NYSE: BKE) reported better-than-expected Q1 expectations as revenue surged.
• Campbell Soup Co. (NYSE: CPB) higher Q2 earnings beat expectations and sent shares upward.
• Deere & Co. (NYSE: DE) reported better-than-expected Q3 earnings, sending shares higher.

Last week we got a good look at how the apparel retailers have been doing when JCPenney Inc. (NYSE: JCP), Kohl's Corp. (NYSE: KSS), Nordstrom Inc. (NYSE: JWN), and Urban Outfitters Inc. (NASDAQ: URBN) all reported better-than-expected earnings for the most recent quarter. On the other hand, Abercrombie & Fitch Co. (NYSE: ANF), Eddie Bauer Holdings Inc. (NASDAQ: EBHI), Liz Claiborne Inc. (NYSE: LIZ), and Macy's Inc. (NYSE: M) reported quarterly losses, reflecting the ongoing reluctance of consumers to spend.

Anyway, Abercrombie, which shares space at the mall with names like J.C. Penney (NYSE: JCP), American Eagle Outfitters (NYSE: AEO), Gap (NYSE: GPS), and Aeropostale (NYSE: ARO), saw its top line decline by 24%. Same-store sales for the company's entire operations dropped 30%. Same-store sales at the Abercrombie & Fitch brand itself plunged 26%. Earnings per share took a dive of more than 50% to $0.31. It should be noted, however, that there is a pending non-cash charge that will be added to these results at a later time.

Retail is abysmal right now, and apparel is getting totally hammered.

But one segment of that market is holding up pretty well: clothing for teens. The USA Today reports that Buckle (NASDAQ: BKE), Hot Topic (NASDAQ: HOTT), and Aéropostale (NYSE: ARO) were the only specialty stores this week to report positive same-store sales in March.

Mary Brett Whitfield, senior vice president at the management consulting and research firm Retail Forward, told the newspaper that "Teens are still growing and might actually need new clothes."