Men’s Warehouse (MW)
Back in early January
Warehouse hit the Rank-Buy list showing strong momentum in the stock
fundamentals. In the time since, the
stock has rallied 25% hitting a new 52 week high of $40.51.
That run was later
by a stronger than expected earnings report on March 7th.
After this recent rally does Men’s Warehouse have
more room to run?
clothing company founded in Houston in 1973 has come a long way since
humble beginnings. Although George Zimmer’s trademark motto
changed, (aside from his now distinctly scratchy voice) the company’s
reach and profitability has soared. So has its stock…
In a world
competition for price and business is tough, Men’s Warehouse is not
guaranteeing “you’ll like the way you look” but they are honing in on a
market that has become not only price sensitive, but more prudent and
discerning in their purchases – The middle class.
Strong Earnings Trends
The most recent upside surprise
added to MW’s long string of earnings beats, bringing their average
24% over the past year.
MW reported a Q4
of 7 cents (unadjusted), which was much less than the 13 cent loss
Consensus Estimate going into the report.
The loss was also a huge improvement over the 19 cent loss in the year
The Men’s Warehouse
the business, which is one of four, saw revenues increase almost
It represents about 60% of the company’s
higher product margins which were driven mainly by increasing prices in
and a favorable mix of higher margin products.
Gross margins for the quarter also increased 2.7% compared to
Their top line sales of 562.2 million for the
quarter did fall just a bit short of expectations of 563.1 million.
Redemption for the
shortfall came in the company’s forward looking guidance. For
Q12012 Men's Wear expects earnings in a
range of $0.53 to $0.54, and sales growth of 2 to 2.5 percent.
The current Zacks Consensus Estimate stands at
62 cents for the quarter, 8 cents higher than their top end.
For the full fiscal
2012, MW expects earnings in a range of $2.70 to $2.78 per share, with
growth of 4 to 5 percent. Men's Wear
anticipates gross margins in the year to continue to increase motivated
higher average unit retail prices and continued occupancy cost leverage.
Men’s Warehouse has maintained
its Zacks Rank 1 and is delivering results fundamentally.
With a forward P/E of 15.24, the stock is
fairly priced even considering the recent run.
The reality is that
performance will be dictated more by the broad market itself which is
chugging along. That’s not to say one
should throw caution to the wind and ignore any warning signals, but
for now MW
remains a momentum stock.
JANUARY 12th ARTICLE
A Levy is the Momentum Stock Strategist for Zacks.com. He is also the
charge of the market-beating Zacks
Week's Momentum Zacks Rank Buy Stocks:
hit the Zacks Rank 1 buy list, I couldn’t wait for the opportunity
to bring it to all you momentum readers.
While you may
think you know everything about Apple, there are some nuances about the
cycle and the expectations for the company that make it
unique. It’s a
company that everyone says is cheap, but it never seems to get too
lofty in its
In the past
week alone the company was sued by Samsung, got a new price
$710 by Barclays Capital and announced the release of their newer,
higher definition 4G iPad. By the way, you can reserve a new iPad today
starting at $499, for delivery
on March 16th.
bullpen is the new iPhone (5?) which will most likely hit stores later
year. Expectations are high for the new product to blow
after the 4s just seemed to slightly improve on the previous
though the 4s may not have met expectations completely, it broke sales
With all the
excitement, drama and still relatively low P/E multiple, is this cash
generating behemoth still a buy?
Financial Services (DFS)
During the great recession of 2008-09 credit all but
froze completely. The average American (and global) consumer
panic mode shifting from high spending to extreme saving.
and credit card companies also froze their lending
practices as they tried to reconfigure their risk models and remained
just how bad defaults on loans and revolving lines of credit would turn
be. At the peak of the recession, it was hard to tell what
credit card companies would look like or if they would even be around
in a year
the crisis, consumer credit has been
increasing. Revolving credit lines are on the rise and based
data, the US consumer is getting just a little bit stronger each
Debit card transactions remained fairly steady compared to credit card
transactions in the downturn and Discover generates income from ATM and
transactions through its Pulse system.
diverse banking, credit and transactional
business, Discover might just continue to see upward momentum as
All American Pipeline (PAA)
By now, most
of you know that oil prices have been on the rise and many oil and gas
like Plains All American Pipeline have been gaining some serious
the past month or so. MLPs have been especially attractive to
because of their eye-catching yields.
PAA owns and
operates a diversified portfolio of assets that play a key role in the
of U.S. and Canadian energy supplies. The company handles
over 3 million
barrels per day of crude oil, refined products and LPG on average
extensive, strategically located network of assets in select North
producing basins and transportation gateways.
company reported strong earnings and they expect to continue
Corrections Corp of
I remember attending a investment conference last summer
and one of the best presentations I heard discussed was the corrections
industry and how it was a smart and uncommon place to put your money.
CXW was one of the
top selections for its steady growth
and defensive nature of its business. Economies may ebb and
flow, but the
number of incarcerated Americans is steadily growing according to the
Department of Justice.
Back in November,
2011 one of my colleagues noted CXW as
a great value play after the company offer some strong guidance earlier
month. The stock has since risen over 25% and looks to be
steam. In addition, the company announced a quarterly
dividend of $0.20
per share beginning in June 2012.
Jared A Levy is the Momentum Stock
Strategist for Zacks.com. He is also the Editor in charge of the
Whisper Trader Service.