A new retailer popped up on my value screens this weekend. It sports one of the highest yields among retailers, a cheap valuation and has good growth prospects. It makes sense for both value and growth investors.
"True Religion Apparel (TRLG) designs, develops, manufactures, markets, distributes, and sells apparel in North America, Europe, Asia, Australia, Africa, and South America. It offers fashion jeans and related sportswear apparel." (Business description from Yahoo Finance)
8 reasons True Religion is a good value play at just over $22 a share:
- TRLG yields 3.6%, one of the best yields among retailing stocks.
- The company has a fortress balance sheet with $160mm in net cash on the books (Approximately 30% of its current market capitalization).
- Taking out cash, the company sports a $400mm market capitalization and sells for less than one times annual revenues. Given its niche product line and cheap valuations; it would be a logical acquisition target for a larger player.
- The stock is selling near the bottom of its five year valuation range based on P/S, P/B and P/CF.
- TRLG sells for under 11 times forward earnings and sports a five year projected PEG of under 1 (.82).
- The company has grown revenues at better than a 20% annual clip over the past five years and will add more than 10% to its store count in FY2012.
- The six analysts that cover the stock have a median price target of $30.50 a share, more than 30% above its current price.
- It is just starting to target the international market added 5 stores to its existing 9 stores overseas this fiscal year.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TRLG over the next 72 hours.
