Your Portfolio Could Look Fat In These Jeans

Sep.22.12 | About: True Religion (TRLG)

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 (NASDAQ: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:

  1. TRLG yields 3.6%, one of the best yields among retailing stocks.
  2. The company has a fortress balance sheet with $160mm in net cash on the books (Approximately 30% of its current market capitalization).
  3. 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.
  4. The stock is selling near the bottom of its five year valuation range based on P/S, P/B and P/CF.
  5. TRLG sells for under 11 times forward earnings and sports a five year projected PEG of under 1 (.82).
  6. 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.
  7. The six analysts that cover the stock have a median price target of $30.50 a share, more than 30% above its current price.
  8. 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. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.