Trading Aeropostale

I’ve already played shares of Aeropostale (ARO) for a trade earlier this year, and the stock is getting back to an attractive level to duplicate that feat. It’s fairly rare to have a stock that, when it gets to a certain price, looks very attractive from both a technical and valuation perspective. ARO shares at $26 each present such an opportunity.

The stock is fairly volatile and has been hit this week after releasing lackluster April sales numbers. Even still, the stock is cheap and has come down to its recurring support level as you can see from this chart. Trading at $26 and change, I think there is limited downside and this is the kind of stock that could run to $30 pretty quickly from here. However this is more of a short-term trade for 2 or 3 points, as opposed to a long term investment.

Enjoy this post? Subscribe and never miss another one: RSS | Email | Twitter

4 Thoughts on “Trading Aeropostale

  1. DBD Press Room on May 9, 2005 at 9:40 AM said:

    This success for Aeropostale has to be in direct correlation to their huge marketing push during the NCAA conference tourney week. Adolescent girls are the top viewing audience for the Big East and MVC conference tourneys. Just look how the stock shot up from mid-February to early march. The adolescent girls were probably buying up shares and therefore had little disposable income to buy actual clothes at ARO…that explains the weaker sales numbers.

  2. Chad Brand on May 9, 2005 at 11:08 AM said:

    No doubt one of the worst marketing ideas I’ve ever seen. The concept of “target market” is one of the very first topics in an introductory marketing class. When I saw CompUSA sponsor the Kentucky Derby pre-race coverage on ESPN, I thought they must have gotten an advertising company reference from ARO.

  3. Anonymous on June 2, 2005 at 12:58 PM said:

    ARO reports a second straight decline in year-to-year monthly sales and you finally get your first big jump, Chad — though I must say, URBN has been equally ridiculous today (along with others in teen retail).

  4. Chad Brand on June 2, 2005 at 1:08 PM said:

    It’s all about expectations with these stocks. Investors had hit them pretty hard as talks of a denim glut made their way across trading desks in recent weeks. We have gotten the 10% pop that I expected out of the ARO trade, thanks to today’s trading.

    URBN has been very hot as of late, but investors who are fearful of the high multiple should still stay the course. Such a high P/E does make it vulnerable to short-term hiccups of several points, but long term this company has just begun to tap its growth potential.

    In sum, trim the ARO and hold onto the URBN.

Post Navigation