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View Connor Haley's Comments
Aeropostale: Low Risk Stock With Big Upside
I somewhat addressed your point about aggressive discounting in the variant view. It is definitely something to watch. However, if one takes a long-term view, the returns on capital have been outstanding. Could all of this suddenly change and competitors start to really eat away at ARO's business? It's possible. Fashion risk and a fickle consumer are definitely risks here.
I think at 4.1X EV/EBITDA, investors are being paid to take the plunge. With the current market price, I think the margin of safety is sufficient enough to cover those risks. Again, we are talking about a company with a great track record of growth... and the market is pricing it as if it will only grow at inflation., especially when the possibility of a private buyer is in play. I think it is a very attractive risk/reward.
Jan 18, 2011. 11:57 AM
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