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On Jan 25, 2013, Zacks Investment Research upgraded DSW Inc. (DSW - Snapshot Report) to a Zacks Rank #1 (Strong Buy). The company has amassed a solid return of roughly 45.5% over the past one year.

Why the Upgrade?

DSW has been witnessing rising earnings estimates on the back of robust third-quarter fiscal 2012 results and a sturdy outlook for fiscal 2012. Moreover, this leading footwear and accessories retailer has outperformed the Zacks Consensus Estimate in 7 straight quarters by an average of 11.9%.

The company declared impressive third-quarter results on Nov 20, 2012, wherein earnings of $1.02 per share surpassed the Zacks Consensus Estimate of 89 cents by 14.6% and increased 15.9% from 88 cents earned in the prior-year quarter buoyed by top-line growth. Net sales rose 11.7% year over year to $592.7 million, and came ahead of the Zacks Consensus Estimate of $588 million. Comparable sales climbed 6.3%.

Robust top-line performance, healthy operating margin, rational store expansion strategy, strong financial position and a solid fiscal 2012 guidance justify the stock’s Zacks Rank.

Based on its strong fundamentals, management anticipates fiscal 2012 earnings between $3.30 and $3.40 per share.

The Zacks Consensus Estimate for fiscal 2012 rose 2.1% to $3.38 per share over the last 90 days, and has a close proximity with the upper end of the company’s guidance range. For fiscal 2013, the Zacks Consensus Estimate advanced 2.1% over the same timeframe to $3.87 per share.

Other Stocks to Consider

Other stocks in the retail apparel, shoe sector that you could consider are Citi Trends, Inc. (CTRN - Analyst Report) and Destination Maternity Corporation , both of which hold a Zacks Rank #1 (Strong Buy), and are expected to continue with their upbeat performances. Another stock that should be merited is Abercrombie & Fitch Co. (ANF - Analyst Report), which holds a Zacks Rank #2 (Buy) and is expected to continue with its positive earnings surprise trend.

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