Citi Trends: Trending Higher, With New Growth Strategy

Dec. 15, 2021 6:56 AM ETCiti Trends, Inc. (CTRN) Stock24 Comments
The Bulls Bay profile picture
The Bulls Bay
442 Followers

Summary

  • Citi Trends is an undervalued specialty apparel retailer with a debt-free balance sheet and all-new leadership.
  • The market is discounting the earnings growth potential of new store openings, store remodels, more productive merchandising management, and new supply-chain efficiencies.
  • Citi Trends specializes in an underserved customer niche, with neighborhood stores as one-stop shops for African-American and Hispanic families.
  • We anticipate Citi Trends will pre-announce better-than-expected 2021 holiday sales, instill greater confidence with an updated multi-year growth plan, and reinstate its dividend.
  • We expect the stock to re-rate higher as these catalysts bear fruition, resulting in shares increasing by at least 37% to $107 over the next 12 months.

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Investment Thesis

Citi Trends (NASDAQ:CTRN), a specialty apparel value-priced retailer, has compelling competitive advantages that its new leadership team is leveraging for substantial earnings growth. CTRN is a rare specialty retailer that serves an underserved niche, African American

This article was written by

The Bulls Bay profile picture
442 Followers
The Bulls Bay is the founder and portfolio manager of a family office. Previously, he was a sell-side equity research analyst covering consumer/retail and later a senior analyst at a long/short, special situations hedge fund. He is particularly attracted to value, deep value, and special situations equities across industries, while specializing in consumer/retail. In addition, The Bulls Bay sells covered calls as an opportunistic options strategy.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CTRN either through stock ownership, options, or other derivatives. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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