Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

American Eagle Outfitters (AEO), Abercrombie & Fitch Co. (ANF): Make Fashion a Part of Your Portfolio

Page 1 of 2

The economic recovery in the United States has helped people achieve solid profits on their equity investments since 2009. Even though the financial meltdown is now part of our history lessons, it is not uncommon to find people who still perceive the current market condition as a bubble ready to burst. I am not one of the pessimists, and I believe that the market still has potential going forward, but it doesn’t really hurt to take a cautionary approach to investing.

American Eagle Outfitters (NYSE:AEO)The clothing industry presents a very decent choice for risk-averse investors. The demand for clothes is always going to be there; no matter if it’s going to be a time of recession or a boom in the country. American Eagle Outfitters (NYSE:AEO), Abercrombie & Fitch Co. (NYSE:ANF) and Ascena Retail Group Inc (NASDAQ:ASNA) are three apparel companies that can become a part of your portfolio. Each of these three companies has a unique story.

Online is the new trend

With a focus towards teenagers and young adults, American Eagle Outfitters (NYSE:AEO) is my first choice from the apparel industry. The company’s retail outlets are present in 16 countries worldwide, whereas its e-commerce operations help it to sell products to customers in 81 countries.

The company’s e-commerce operations helped it grow revenues more than 25% in 2012. American Eagle Outfitters (NYSE:AEO) has great potential going forward; it has the ability to stay on top of any changes in contemporary fashion, and has strong customer engagement. The company has a disciplined inventory control system, as it employs the Just-In-Time strategy to manage inventories. This makes the company avoid surplus inventory situations, therefore leading to lesser chances of the company offering discounts or markdowns.

Another great thing about this company is its focus on international expansion. The company recently acquired its six franchise stores in China and opened a new one in Mexico. In the Philippines, the company has given a go-ahead to its first franchise store. I believe the company is on the right path with great potential for growth in the coming years.

Loyal customers for this apparel manufacturer

Abercrombie & Fitch Co. (NYSE:ANF) has three segments: U.S. stores, International stores and Direct-to-Consumer, through which it targets men, women and kids. The major portion (almost 42.4%) of revenues comes from internet & catalog orders. Other sources of revenues include the company’s brand stores, Hollister stores, and the Gilly Hicks & Abercrombie & Fitch Co. (NYSE:ANF) kids stores.

The company’s 1Q13 results were a shocker, as the company’s revenues went down by almost 42% on the QoQ basis. This was the result of an unexpected shortage of inventory rather than a decrease in demand for the company’s widely popular clothes. Abercrombie & Fitch Co. (NYSE:ANF) is very confident that its business model has the potential to achieve growth in the coming years and such glitches in its inventory systems will only help it to debug and solidify its systems.

Abercrombie & Fitch Co. (NYSE:ANF) has a very loyal following among its customers, which it can rely on for its revenues. Its brand image has high recall and is very recognizable among specific young age groups. This is the reason why the company is able to sell its highly priced products, even though economic conditions are not right for such a strategy. As a large percentage of the company’s sales are already through its online portal, I expect it to perform well in the coming years.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!