Zumiez: The Fastest Growing Teen Retailer Around

Zumiez Inc. (ZUMZ) is a mall-based specialty retailer of action sports-related apparel, footwear, equipment and accessories operating under the Zumiez brand name. As of January 28, 2006, the Company operated 174 stores primarily located in shopping malls, giving it a presence in 19 states. Zumiez stores cater to young men and women between the ages of 12 and 24 who seek brands representing a lifestyle centered on activities that include skateboarding, surfing, snowboarding, bicycle motocross and motocross.

It supports the action sports lifestyle and promotes its brand through a multi-faceted marketing approach that is designed to integrate its brand image with its customers' activities and interests. In addition, Zumiez operates a Website, which sells merchandise online and provides content and a community for its target customers. - Google Finance

FUNDAMENTALS: Zumiez remained stagnant for years, but is now the fastest growing teen retailer around. Capitalizing on snowboard and skateboard apparel, it really began to ramp up growth in the middle of 2005 and hasn't looked back. Year over year earnings have increased about 55% over the past couple years and while expected to slow a bit, earnings are expected (according to analysts) to remain strong at around 30 - 35% over the next couple years. Its profit margins are just average for its industry, but ROE is outstanding (23%) and continues to rise, indicating strong management.

TECHNICAL: Technically, the stock recently cleared a new all time high after gapping up out of a long base. It doesn't get any more bullish than that! Volume levels over the past few months indicate tremendous demand for the stock. With no overhead resistance in sight, the sky is the limit for Zumiez. If there is one negative in the chart, it's the magnitude of the decline in the base, dropping from a high of 38.85 to a low of 20 (nearly a 50% drop). Typically, you don't want the base to be deeper than about a 35% correction. What this probably means is that the stock will need to spend some time going sideways from here. It's a bit extended now, but may offer a great opportunity on a retest of the 50 day moving average.

Full Disclosure: Author has no position in Zumiez (ZUMZ).

ZUMZ 1-yr chart