Retail Sector Gets a Boost From Children's Clothing Stocks

Children's Place, Buckle, Hot Topic and Aeropostale Are Ripe for Investment Now

stock ratings

Stock	Grade
ARO Aeropostale Inc.
BKE Buckle Inc.
HOTT Hot Topic Inc.
PLCE Children's Place Retail Stores Inc.

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May 21, 2009

Kids are still growing, and parents are still buying them clothes. That's why stocks like The Children's Place (PLCE), Buckle (BKE), Hot Topic (HOTT) and Aeropostale (ARO) continue to do well, even in an economy where money for discretionary purchases, like clothes, is tight.

The Children's Place, the mall-based children's clothing discounter, reported income of $23.7 million or 80 cents per share today, up from $19.4 million or 66 cents per share in the first quarter of 2008. Excluding one-time restructuring costs, earnings were $21.8 million or 74 cents per share, which was just a penny shy of analyst expectations.

I like the direction management is taking in cost-cutting to strengthen the business, and I rate the Children's Place an A, making it an excellent buy.

Retail Stocks That Cater to Teens Will Enjoy Gains

Buckle (BKE) also reported today -- an outstanding first-quarter earnings of 58 cents a share. That's a 44% increase over the 40 cents per share from last year, and easily topped Wall Street's estimate of 50 cents a share. Sales rose 25% to $200 million.

I continue to recommend Buckle as a strong buy.

Other retailers I like include Aeropostale, a mall-based specialty retailer of casual apparel for pre-teens and teens and Hot Topic (HOTT).

Aeropostale's last quarter was strong, due in part to strong growth in e-commerce sales. ARO remains a good buy.

HOTT reported net income of $1.2 million or 3 cents per share yesterday, compared to a net loss of $1.4 million or 3 cents per share for the comparable period last year. Total sales for the first quarter increased 10.1% to $175.1 million compared to $159 million for the first quarter last year. Total comparable store sales increased 7.1% for the first quarter 2009.

I rate a HOTT an A or a strong buy.

While the retail sector may not have completely rebounded, clearly key retailers are doing what is necessary to thrive in this tight economy. These four are great stocks to invest in right now.

Is this market rally for real? A lot of companies beat earnings expectations last quarter, but many of those gains were due to cost-cutting, not increased revenue. You still have to be selective in choosing stocks that have solid fundamental reasons for growth. Louis Navellier screens his picks against strict momentum growth criteria. Click here to get his new FREE special report, Top 5 Stocks to Own Now!!