Every week, I run a scan that ferrets out stocks that boast outstanding recent earnings performance along with price increases.
This week, a number of retail and apparel-related names jumped out. One company that has actually turned up on various scans lately is outdoor gear retailer Cabela's (CAB). The midcap name has grown earnings at a rate of 14% or higher in each of the past three quarters, and its price has advanced nearly 50% so far in 2012.
The company reported its first quarter ahead of the open on Thursday, sending shares skidding as much as 12% intraday on declining Internet and phone orders. An intraday rally boosted the stock, however, which was hovering just below its 20-day moving average before the close. It was trading well above its 50-day average.
While that kind of action can panic daytraders, I'm encouraged by the intraday rebound. It's not unusual to see an overreaction (one way or the other) following an earnings report. If Cabela's remains above its key 50-day line and consolidates in a more orderly fashion going forward, it will be a viable watch-list candidate.
One of the growth leaders from 2009, 2010 and early 2011 was watch and accessories retailer Fossil (FOSL). The company reports its first quarter before the opening bell on May 8, with analysts eying income of $0.92 per share on sales of $617.64 million. Those would be year-over-year improvements in both categories.
The earnings track record is part of what landed the stock on my scans this week. Fossil has reported income gains of 9% or greater in each quarter over the past two years. In fact, that 9% year-over-year gain, which occurred in the third quarter of 2011, was the smallest increase during that time, as the other quarters came in with double- or triple-digit earnings gains.
The stock rallied to an all-time high of $139.20 on April 5 and has been retreating in an orderly fashion since then. As of Thursday, it was getting solid 10-week support.
Given that Fossil is still consolidating and that it reports earnings in less than two weeks, I consider this a name one to watch, not one to buy, at this time.
A stock that I've written about here a few times since its July IPO is Francesca's (FRAN), a women's clothing retailer that has a market cap of almost $1.3 billion and trades nearly 600,000 shares a day -- not bad liquidity.
After retreating from a March 26 high of $33.93, the stock has held above its 50-day average, although four of the past five weeks have shown downside trade.
Wall Street analysts see income gains of 42% and 26% for the next two fiscal years. Profit increased at rates of 15% or more in each of the previous eight quarters. Revenue gains were in the double digits during that time.
Despite the recent pullback, Francesca's is up more than 71% so far this year.
It's a bit premature to say what the next buy point on Francesca's might be. The next earnings report is not until early June, so it's possible that a new opportunity may present itself before the stock regains that prior high of $33.93.
I continue to see this as a name with excellent potential, and it's likely a stock I will enter at some point in the not-so-distant future. One possible trigger that may occur soon: The 10-day moving average appears poised to cross above the 20-day line, an event that is often a bullish indicator for further price gains.
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