Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Francesca's, A Growing Retailer At Bargain Basement Price

|Includes: Francesca's Holdings Corp. (FRAN)

If you thought I liked Francesca's (NASDAQ:FRAN) at $28, well I like it even better at $24. I know the star traders of the world would crucify me for that, but the Francesca's story is starting to get better.

At the end of first quarter 2013, there were 416 locations with opportunities to expand the current boutique concept to about 900 locations. At roughly 1,400 square feet per boutique, each location is relatively small with a communal feel to it. I had an opportunity to visit a few locations with each being somewhat different in appearance, but beautifully laid out and fitting nicely with the surrounding areas. It kind of feels like you are in an independently owned boutique in a walkable resort town, think Aspen, Colorado without the high prices. If there was one common theme, each store was jam packed.

Over the past three years, annual compound average sales growth was 49%. First quarter 2013 sales growth of 29% is still significant and meets one of my criteria for purchasing a stock, which is sales growth of at least 25%. There has been some recent weakness in the stock price due to comp sales (growth in sales of boutiques open at least one year) of only 2% year over year being well below last year's 16%. Over the past three years, average comp sales increased 13.5%. I believe last year was an anomaly and comps were higher than expected due to unseasonably warm spring weather last year. This year has been more of a normal year as far as weather is concerned, and I would look at comps over two years, or roughly 8%.

EBITDA, sometimes called cash earnings, is a metric I like to use to determine a company's operating efficiency. There are other metrics when included with this metric that can provide a better picture, especially when combined with the balance sheet. However, I typically start here and noticed 1st quarter EBITDA increased 25.5% year over year. 1st quarter earnings also increased in the 25% range. EBITDA and earnings growth should be similar in the 2nd quarter, and probably higher as the company sees a full quarter worth of benefits from boutiques open in the 1st quarter.

From a technical standpoint, the stock appears to be getting support slightly below $24. Combined with fundamentals, $24 seems like a really good bargain here. I choose a stock to buy based on the fundamentals, but will not buy until the technicals favor buying. With technical analysis, you also get an idea of how the institutional community views the stock, which is kind of wait and see right now. I also like to use moving averages such as 5, 10, 20, 50, 100, and 200 day. The 5 day moving average is still trending below the 10 day moving average. Once they cross, which should happen really soon as the gap is narrowing and the 5 day is starting to turn, jump on in, or else you might miss out on an early Christmas gift.

Disclosure: I am long FRAN.