American Eagle Outfitters (AEO)
< Return to Bulls pageUpside Potential- Outstanding track record with positive net income & free cash flow generated in each of the last 10 years.
- Best-in-class retailer led by solid management.
- Barring liquidity issues, the company’s balance sheet is unencumbered and large enough to support expansion and returning cash to shareholders via dividends (2% yield) and buybacks (41.3M shares authorized through FY 2010).
- Even as their main AE brand may be facing consumer fatigue (Aeropostale appears to be taking share), the new aerie brand could do something similar to the “tired” Victoria’s Secret brand among younger women. The company senses a growth opportunity in this market and is aggressively pursuing it by opening 80 aerie stores in 2008 along. For reference, Victoria’s Secret generated $7B in sales & $1B in operating income in 2006
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