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I mentioned Hennes & Mauritz (OTCPK:HMRZF) last week as part of my international stocks shopping list, but I think the stock warrants its own independent analysis.

This Ikea of specialty retail is indeed a phenomenon. There are only two stores in the greater Los Angeles area, yet everyone seems to have heard about them. In Pasadena, CA, lines of twenty and thirty somethings run out around the store. The company is focused on delivering fashion for less for both sexes. Having been to a couple of their stores recently including the three story one in Chicago, their clothing lines are impressive and the prices range from moderate to unbelievably cheap. From business attire to casual wear to beach wear, H&M covers the entire spectrum of clothing for women, men and children. Fashionable clothes, great quality, low prices - seems like a great combination.

H&M employs over 60,000 people to operate over 1400 stores in 28 countries, yet only about 130 of these stores are in the US, primarily on the east coast. The company has big plans for expansion towards the west in both US and Canada. Some analysts believe that H&M could eventually grow to have 1000 stores in the US. The company opened its first store in the US in 2000, and since then the US has become one of its fastest growing markets, with sales up 30% this year over last year. Additionally, its biggest market, Germany, is the fastest growing non-emerging market in Europe and the company recently opened a couple of stores in China and Hong Kong.

H&M's philosophy is to provide fashion and quality at the best price and they have been able to do that by employing 120 designers and using independent suppliers in Asia and Europe rather than running its own factories.

The company also encourages its consumers to submit designs through various initiatives one of which is about to hit the market this month. H&M recently collaborated with Sims 2 by Electronic Arts (ERTS) on a project called "The Sims 2 Fashion Stuff Pack”. The stuff pack contains 60 garments enabling the Sims to be dressed in the very latest men's and women's fashions - all inspired by H&M's real-life summer collection. The players can also create their own H&M store and furnish it with mannequins, clothing racks, cash registers and a fitting room.

In conjunction with the release of the Stuff Pack, the Fashion Runway Showcase will also be launched in June. Participants will have a period of six weeks to send in their own designs. The program will be shown online on The Sims official website and at hm.com, among others. Each week, 12 of the designs will be selected by a jury and from these, the public will vote for their favorite. One of the weekly favorites will then be chosen by the jury for production and sale in H&M's stores. This is just one of the ways the company keeps its consumers engaged and uses innovative ways to design and market their apparel.

The company trades on pink sheets under the ticker HMRZF.PK but this should not prevent investors from buying. Same store sales growth for each month this year has been at least 5% compared to last year, while overall sales growth has ranged from 15-30% over last year. These numbers don't include the gains from foreign exchange, which could add up to another 5% to H&M's numbers.

The stock is down 10% from its late April levels and present an ideal buying opportunity at around $60. I recommend buying these ahead of earnings next week.

HMRZF.PK 1-yr chart: