Urban Outfitters Stocks Hidden Value
This article originally appeared on Jan 29, 2014 on RealMoney.com. To read more content like this plus see inside Jim Cramer's multimillion-dollar portfolio for FREE... Click Here NOW.
Market confidence that the economy was coming back has had a mixed effect on shares of fashion retailers. To be sure, the beneficiaries have been the fashion-focused department stores such as Nordstrom
On the opposite extreme, you have mass-merchant retailers, including JCPenney
Tucked in the middle are fashion labels that are experiencing a cyclical adjustment. One-time darlings such as Aeropostale (AERO) and Abercrombie and Fitch
One name that deserves a close look is Urban Outfitters
The company operates 229 Urban Outfitters stores that offer eclectic fashion inspired by a contemporary love for art, music, and fashion. Focusing on 18 year olds and above, these stores sell men's and women's apparel as well as unique items for the modern home or apartment. Anthropologie is collection of 188 retail stores worldwide that offer a unique array of fashions from the world over that are designed for the fashion conscious women.
You won't find brands fashions such as Kors, Ralph Lauren
Free People is another high-quality boutique label with over 75 stores, but also sells its products to more than 1,500 specialty boutiques. You will find Free People at Nordstrom and other high-quality fashion boutiques. BHLDN is a unique collection of wedding fashions while Terrian offers a unique approach to selling home and garden products.
Shares in URBN currently trade for $36. Despite reporting record holiday sales, the stock price has fallen from $44 in the past 52 weeks. The company has no debt and over $400 million in cash on the balance sheet. Shares do trade at 20x trailing earnings. This is perhaps on the high side of the retailing range, but URBN earnings should continue to grow over the next several years. Its brands offer a unique collection of fashion, a trend that is booming -- especially with today's generation, which is clearly inspired by being unique so as to stand out amid the world of smartphones, social media, Pinterest and everything in between.