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Dillard's (NYSE:DDS) reported stellar earnings yesterday, sending the stock soaring to new highs. Combined with a knock-out first quarter and the continuation of its share buyback program, the stock has gone up 84% since August of last year:

Dillard's Chief Executive Officer, William T. Dillard, II, stated, "We are happy to report a very strong start to 2012 with our seventh consecutive quarter of increased same store sales as well as record setting earnings and earnings per share performances."

Included in net income for the prior year first quarter is a $3.0 million net pretax gain ($1.9 million after tax or $0.04 per diluted share) consisting of a distribution from a mall joint venture and asset impairment and store closing charges.

The mall joint venture is another thing that separates Dillard's from other retailers. In contrast to the other companies that are dependent on landlords for space, Dillard's owns most of its buildings. And as real estate escalates, so will the stock. Real estate has been in a slump for the last three or four years, but that is slowly changing.

The company operates 287 stores and 17 clearance centers in 29 states, for a total square footage of 52.5 million. Net income was $95 million ($1.89 a share) for Q1, which is a whopping 24% increase over last year. This was accomplished with only a 5% increase in comparable store sales. Most of the net gain was due to a decline in operating expenses.

Chart forDillard

When you compare Dillards to J.C. Penney (NYSE:JCP) and the Dow, you can see it has grown over 150% over the last two years.

Chart forDillard

And when Dillard's is compared to Macy's (NYSE:M) it is still superior. Although Macy's is a stock that I have recommended in the past, it has only grown 50% in share price in comparison to Dillard's. However Macy's has also surpassed the Dow. When you look at Dillard's P/E ratio of 8.32 it is superior to both Macy's P/E of 12.49 and JCP which is NA due to negative earnings.

On December 13, I wrote an article recommending that you buy Dillard's on the dips when it was $46.20 a share. And If you had bought 1,000 shares on that day for 46,200, your shares would be worth over $70,000 this afternoon. On that same day I recommended buying Macy's for $30.71. It has not gone up as dramatically as Dillard's, but it is currently at $38.01, up 24%. If you had bought 1,000 shares of both companies in December, your total investment would be worth $108,000 in just under five months. And both of these stocks are headed higher in the future. A lot of investors will not buy at these higher prices, because they feel that the price is too high. But as I said in another article most of the prices of good companies will continue to climb higher and higher.

It's funny, all of the price targets from the analysts are $60 and under for Dillard's. I am going out on a limb here to give this company a target price of $85 by the end of the year. I think the merchandise in its private brands is exceptional, and this will lead to even bigger margins in the future. I am sticking with my first recommendation in December: Buy on the dips - if you can.

And Macy's looks like it is still a buy with a nice P/E of 12.49. Although because Dillard's is doing share buybacks, which I consider to elevate the value of a company's share price, I think it will continue to surpass Macy's. According to the press release mentioned above:

During the 13 weeks ended April 28, 2012, Dillard's repurchased approximately $27.5 million of Class A Common Stock (0.4 million shares). At April 28, 2012, $250.0 million of authorization remained under the company's share repurchase program. Total shares outstanding (Class A and Class B Common Stock) at April 28, 2012, and April 30, 2011, were 49.1 million and 53.9 million, respectively.

So as long as the buybacks continue, the share price will go higher. But, right now with the layoffs at J.C. Penney, and its track record over the last two years, I would only recommend that you buy it as a gamble. If you own the stock, and like it, then definitely hold on to it. They are trying new things and may be able to turn it all around.

Disclosure: I am long DDS.

Source: Dillard's Stock Soars Above $72 On Record Earnings