Topic: Growth Stocks

Aggressive investing: This U.S. retailer caters to an attractive market

The U.S. consumer sector is highly competitive. Independent stores and smaller chains continue to face rising competition from large discount retailers, like Wal-Mart and Costco. As well, retailers are more exposed to swings in the overall economy than companies in some other sectors, such as utilities.

However, aggressive investing in consumer stocks also holds the potential for spectacular gains. To cut your risk and earn higher profits when aggressive investing in the junior retail segment, it’s especially important to focus on chains that can adapt quickly and prosper in the fast-changing retail landscape.

New stores push up this aggressive investing stock’s sales and earnings

In the latest Stock Pickers Digest, we’ve updated our buy/sell advice on Aeropostale Inc. (symbol ARO on New York). The company is a mall-based retailer of casual clothing and accessories. It now has 907 stores, and mainly targets 14- to 17-year-old women and men. Its active-oriented clothing has a reputation for high quality and low prices.

Aeropostale also has 46 “P.S. from Aeropostale” stores, which are aimed at seven-to-12-year-old elementary-school students.

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Aeopostale’s sales and earnings rose sharply in its latest quarter, which ended July 31, 2010. The company expects its sales gains to continue: In the quarter ended October 30, 2010, Aeropostale expects to report 6% higher sales, to $602.8 million from $567.8 million a year earlier.

The gain will come from new stores. Same-store sales will be unchanged. Same-store sales compare results from stores that have been open for a year or more. This lets investors see how much of a sales gain comes from internal growth, and how much comes from new stores.

Aggressive investing: We’ll take an in-depth look at Aeropostale’s strategy

Fashion trends are fickle, and consumers (particularly young people) are often quick to switch brands. Moreover, U.S. unemployment remains at a high 9.6%. That could hurt retail sales during the upcoming holiday shopping season.

In the latest Stock Pickers Digest, we look to see if the advantages that Aeropostale has will let it keep increasing its sales and protect its market share from competitors like Abercrombie & Fitch, American Eagle and The Gap.

You can get our full analysis and clear buy/sell/hold advice on Aeropostale and 19 other aggressive investing picks in the latest Stock Pickers Digest. What’s more, you can get this issue absolutely free. Click here to learn how.

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