Seeking Alpha
Editor's notes: ARO is bleeding but not broken, argues Tim Travis. The company's sterling balance sheet and low valuation make it an attractive LBO target in a low interest rate environment.

Intelligent businessmen and investors tend to acquire businesses in recessions, or when particular industries are undergoing recessionary-like conditions. Teen-retail in the United States is an area that is seeing intense pressure from high teen unemployment rates, which are reducing disposable income for the target market, and over-saturation leading to aggressive discounting, which has a very negative impact on margins. Teen-fashion is notoriously fickle and difficult to predict, which makes it particularly difficult to find businesses with durable competitive advantages. While there is no getting around these negatives, the most important determinant in making an investment is the price paid versus the value received, and I believe that at current prices, Aeropostale (ARO) offers an attractive turnaround opportunity...

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