Aeropostale (ARO) primarily competes with other specialty retailers like American Eagle Outfitters (AEO), Abercrombie & Fitch (ANF), Gap (GPS) and Urban Outfitters (URBN). The company has seen steady growth in its profit margins over the past few years. EBITDA margins have increased from 10.4% in 2005 to around 19% in 2009 as Aeropostale has generated growth in comparable store sales, a metric used to measure retail sales strength.

We expect this trend to continue as the company explores ways to further optimize its supply chain, thereby improving operational efficiency. However, increasing raw material prices and a prolonged weakness in consumer spending could pose a headwind to our optimistic EBITDA margin outlook.

Continue reading Commodity Costs, Weak Consumer Spending Could Dampen Aeropostale Margins

Commodity Costs, Weak Consumer Spending Could Dampen Aeropostale Margins originally appeared on BloggingStocks on Sun, 06 Mar 2011 13:40:00 EST. Please see our terms for use of feeds.

The past week's datapoint-of-consequence for investors had to be the December 2010 consumer credit report, which indicated that credit card debt increased for the first time in more than two years.

Revolving debt, which includes credit cards, increased by $2.3 billion in December, or at a 3.5% annualized rate, the U.S Federal Reserve said. It was the first monthly increase in credit card use since August 2008.

Continue reading Tell-Tale Stat: Credit Card Debt Rises for First Time Since August 2008

Tell-Tale Stat: Credit Card Debt Rises for First Time Since August 2008 originally appeared on BloggingStocks on Sun, 13 Feb 2011 10:10:00 EST. Please see our terms for use of feeds.

I first discussed MasterCard Inc. (MA) here on April 13, 2009, at a price of $176.06, and shares have vectored toward $250 resistance after a dip to $215 this winter. I obviously still like the business model at this stage.

Look for MasterCard to post an impressive 9% to 12% revenue increase in 2011 and a 7% to 9% gain in 2012. MasterCard has emerged from the nation's worst recession in more than 25 years in enviable shape, even amid the frugal consumer era that's likely to restrict U.S. consumer spending. Look for transaction growth to continue, as a result of the U.S. and global trend toward increased use of credit cards.

Continue reading Is MasterCard's Stock Headed to $300 and Beyond?

Is MasterCard's Stock Headed to $300 and Beyond? originally appeared on BloggingStocks on Wed, 09 Feb 2011 11:30:00 EST. Please see our terms for use of feeds.

In projecting U.S. GDP growth at about a 2% rate for the remainder of this year and in 2011, I have noted that the two propellants of growth so far in this economic recovery -- the inventory revival and fiscal stimuli -- are largely exhausted.

But are there other sectors of the economy that might serve as the backbone of any meaningful economic recovery? I don't see any, especially with U.S. consumers continuing their saving spree, repaying debts and remaining hesitant to spend like they did during the boom times of earlier years.

Continue reading Bleak Prospects for Further Economic Growth

Bleak Prospects for Further Economic Growth originally appeared on BloggingStocks on Wed, 22 Dec 2010 12:00:00 EST. Please see our terms for use of feeds.

In my new book, The Age of Deleveraging: Investment Strategies for an Era of Slow Growth and Deflation, I discuss nine reasons for slow U.S. economic growth and real GDP gains of about 2% annually in the long run.

1. U.S. consumers will shift from a 25-year borrowing-and-spending binge to a saving spree. This will spread abroad as American consumers curtail the imports of the goods and services many foreign nations depend on for economic growth.

Continue reading Nine Reasons for Slow U.S. Economic Growth

Nine Reasons for Slow U.S. Economic Growth originally appeared on BloggingStocks on Fri, 10 Dec 2010 12:30:00 EST. Please see our terms for use of feeds.

Investors -- certainly U.S. stock investors -- would be wise to keep one eye on the price of oil, currently pushing $90 per barrel. Oil traded up 10 cents to $89.29 on Monday at mid-day.

And the reason is obvious enough: once again, oil is approaching the danger zone, from a U.S. GDP growth standpoint.

No one knows precisely at what point oil begins to substantially hinder consumer spending and slow commercial activity -- but this much is known: every $1 per barrel rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year.

Continue reading Oil's Price Approaches the 'Danger Zone'

Oil's Price Approaches the 'Danger Zone' originally appeared on BloggingStocks on Mon, 06 Dec 2010 13:30:00 EST. Please see our terms for use of feeds.

Friday morning got off to a bearish start, a slump that wasn't helped much by the latest release of consumer sentiment data from Reuters and the University of Michigan (of course, this slow start turned positive thanks to the GDP).

Big Boo's report showed that consumer sentiment weakened from 68.2 in September to 67.7 in October. An earlier estimate for October was 67.9, with a MarketWatch poll showing an estimate for 68.5. The biggest problem facing consumers is the loss of jobs, which was the major reason for the drop in sentiment.

Continue reading Consumer Confidence Softens in October

Consumer Confidence Softens in October originally appeared on BloggingStocks on Fri, 29 Oct 2010 11:00:00 EST. Please see our terms for use of feeds.

"Royal Caribbean (RCL) has nothing new or revolutionary going for it, but it's one of the strongest stocks in the market," says Mike Cintolo.

The editor of Cabot Top Ten Weekly explains, "With its nearly 40 cruise ships, the stock is a a pure-play on discretionary leisure spending, and its earnings can rise rapidly during improving times.

"And that's what investors are discounting now -- earnings fell from $2.82 per share in 2007 to 75 cents last year, but look set to get back to $2 per share this year and challenge new-high ground in 2011!

Continue reading Royal Caribbean (RCL): Cruise for Profits

Royal Caribbean (RCL): Cruise for Profits originally appeared on BloggingStocks on Wed, 20 Oct 2010 10:00:00 EST. Please see our terms for use of feeds.

Continue reading Lack of 2010 COLA for Social Security a Two-Edged Sword for Investors

Lack of 2010 COLA for Social Security a Two-Edged Sword for Investors originally appeared on BloggingStocks on Thu, 14 Oct 2010 15:00:00 EST. Please see our terms for use of feeds.

A member of the National Bureau of Economic Research, which announced Monday that the U.S. recession ended in June 2009, told The New York Times (NYT) the U.S. economy must grow at a 2.5% rate just to keep the unemployment rate, currently 9.6%, constant.

By extension, the world's largest economy will need upwards of 2.7% U.S. GDP growth annually -- probably closer to 3% growth -- to substantially reduce unemployment.

How about getting millions of China's new middle class to contribute to that growth? Li Daokui, an economist and an adviser to the People's Bank of China, agrees, at least regarding consumption by China's consumers.

Continue reading China Economist Calls for Increased Domestic Consumption

China Economist Calls for Increased Domestic Consumption originally appeared on BloggingStocks on Mon, 20 Sep 2010 16:40:00 EST. Please see our terms for use of feeds.

Given the size and complexity of the U.S. economy, forecasts regarding U.S. GDP growth must be viewed with caution: they contain a margin of error, and are subject to substantial revisions. Even so, with consumer credit card-based purchases continuing to decline, one conclusion investors can draw is that U.S. GDP growth probably will be lower during this expansion than it was during previous post-Cold War era expansions.

One major reason? Historically, consumer spending has account for 65% to 70% of U.S. GDP. If consumer spending remains modest, it's highly unlikely that the economy will be able to grow as fast as it typically does when consumption is high.

Continue reading Will Frugal Consumers Lead to Tepid U.S. GDP Growth?

Will Frugal Consumers Lead to Tepid U.S. GDP Growth? originally appeared on BloggingStocks on Wed, 08 Sep 2010 17:10:00 EST. Please see our terms for use of feeds.

News

Continue reading Good News: Consumers Control Credit Cards in Tough Times

Good News: Consumers Control Credit Cards in Tough Times originally appeared on BloggingStocks on Thu, 26 Aug 2010 09:00:00 EST. Please see our terms for use of feeds.

Continue reading Chasing Value: Four Great Stocks -- Gov't Fears Savings Spiraling Out of Control

Chasing Value: Four Great Stocks -- Gov't Fears Savings Spiraling Out of Control originally appeared on BloggingStocks on Fri, 20 Aug 2010 15:00:00 EST. Please see our terms for use of feeds.

Continue reading Closing Bell: Markets Still Acting Range-Bound (KGC, PG, PFE, DOW, CTSH, RIMM)

Closing Bell: Markets Still Acting Range-Bound (KGC, PG, PFE, DOW, CTSH, RIMM) originally appeared on BloggingStocks on Tue, 03 Aug 2010 16:20:00 EST. Please see our terms for use of feeds.

It looks like Monday's rally will be a memory thanks to Tuesday's earnings disappointments and economic data. Let's take a look at the consumer spending data that was released.

The Commerce Department announced that personal spending was unchanged during June, marking the third-straight month that saw "lackluster consumer demand." Incomes were also flat during June, turning in the weakest month in the past nine.

Continue reading Consumer Spending Slows During June

Consumer Spending Slows During June originally appeared on BloggingStocks on Tue, 03 Aug 2010 13:20:00 EST. Please see our terms for use of feeds.

Speaking to state legislators, Federal Reserve Chairman Ben Bernanke detailed specific areas in the economy that are still weak and holding back full recovery.

Among them are:

• Topping the list is high unemployment and a weak housing market. Speaking to this point Bernanke said: "We have a considerable way to go to achieve full recovery in our economy, and many Americans are still grappling with unemployment, foreclosure and lost savings."

Continue reading Bernanke: Economy Still Short of a Full Recovery

Bernanke: Economy Still Short of a Full Recovery originally appeared on BloggingStocks on Tue, 03 Aug 2010 11:20:00 EST. Please see our terms for use of feeds.

Wall Street has been on a tear lately. The major indexes gained 7% during the month of July. That's coming off a 14% decline in May and June. Trading volume was light, about 7.63 billion shares, compared with last year's 9.65 billion. Advancing stocks outnumbered losing stocks by a three to two margin. The S&P 500 is barely squeaking above its 200-day moving average.

Traders are torn between strong earnings and weak economic data. For the most part, earnings of major corporations topped analysts' estimates. But the numbers on the economy show that the recovery is slowing.

Continue reading Wall Street Gains in July Best This Year

Wall Street Gains in July Best This Year originally appeared on BloggingStocks on Sun, 01 Aug 2010 13:40:00 EST. Please see our terms for use of feeds.

Continue reading Call it a Milder U.S. Recovery, but Not a Double-Dip (So Far)

Call it a Milder U.S. Recovery, but Not a Double-Dip (So Far) originally appeared on BloggingStocks on Mon, 19 Jul 2010 17:00:00 EST. Please see our terms for use of feeds.

Continue reading Greenspan Says Recovery Is Pausing, Sees Wealth Effect as Pivotal Growth Engine

Greenspan Says Recovery Is Pausing, Sees Wealth Effect as Pivotal Growth Engine originally appeared on BloggingStocks on Fri, 02 Jul 2010 14:00:00 EST. Please see our terms for use of feeds.

The Labor Department announced Thursday morning that U.S. consumer prices dropped 0.2% in May. May was the second-straight month in which prices dropped, as prices fell 0.1% during April as well. The price drop was precipitated by a 2.9% drop in energy prices, a result of lower gasoline prices.

Although energy prices dropped, the core CPI, which excludes food and energy prices, increased 0.1%. This slight increase was only the second monthly increase this year, and it matched the consensus estimate.

Continue reading Consumer Prices Fall for a Second-Straight Month

Consumer Prices Fall for a Second-Straight Month originally appeared on BloggingStocks on Thu, 17 Jun 2010 11:00:00 EST. Please see our terms for use of feeds.