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Citi Trends in Focus: Should the Stock Be in Your Portfolio?

AEO URBN CTRN PLCE

Trades from $3

You must take a look at off-price retailer, Citi Trends, Inc. (CTRN - Free Report) as the stock looks quite promising. Notably, this Zacks Rank #2 (Buy) stock delivered a yield of over 15% in the past three months. Moreover, the company is likely to gain from its strategies like better utilization of floor area, improvisation of merchandise margins and efficient inventory management. These moves have been helping it to turn its operating performance around.

CITI TRENDS INC Price and Consensus

CITI TRENDS INC Price and Consensus | CITI TRENDS INC Quote

Citi Trends offers merchandise at about 20%−70% discount, which provides it with a competitive edge over its rivals. Further, the company’s niche market is focused on the African-Americans, which together with inviting store formats, position it favorably compared to other off-price retailers and mass merchants.

Evidently, Citi Trends has been undertaking prudent steps to reduce inventory shrinkage. These include enhanced supervision by the operations and loss prevention departments as well as installation of sophisticated surveillance systems in high shrinkage stores.

Additionally, Citi Trends is currently testing its website with limited offerings in order to capture the eCommerce business. Going forward, the company plans to add more assortments to its site based on customer response. Further Citi Trends’ strong balance sheet and cash flow generation ability helps it to undertake shareholder-friendly moves.

Also, the company bounced back in second-quarter fiscal 2016, with narrower-than-expected loss per share and sales beat. Going forward, it expects average units sold to remain pressurized in fiscal 2016. However, the company anticipates robust sales in the fiscal third quarter with persistent development in its home business mix and improvements to apparel variety.

Stocks to Consider

Other favorably ranked stocks in the same industry include American Eagle Outfitters, Inc. (AEO - Free Report) , Urban Outfitters Inc. (URBN - Free Report) and The Children's Place, Inc. (PLCE - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

American Eagle Outfitters, with a long-term earnings growth rate of 11.8%, has gained roughly 15% year to date.

Urban Outfitters, which surged nearly 58% year to date, has a long-term earnings growth rate of 15%.

The Children's Place, with a long-term earnings growth rate of 10.3%, has jumped over 39% year to date.

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