Thursday, March 13, 2008

Short Idea: True Religion Apparel (TRLG)

I was listening to the American Eagle Outfitters (AEO) conference call and noticed that women's bottoms (denim in particular) was weak and that AEO is revamping the entire jean line for the back to school season.

So this gave the idea that True Religion Apparel (TRG) would be an interesting short. They make high end jeans. High end is bad when consumers are trading down. Jeans are bad (apparently, due to some fashion cycle which I don't understand). TRLG is currently trading 17x earnings while AEO and many other apparel retailers are trading around 10x earnings.

This is the first of many such quick pitches I plan to do to give my readers ideas for their watchlist (which I am always in need of). I haven't done any due diligence but I am definitely watching TRLG. I am thinking of either shorting it or doing a long/short pair with AEO to reduce sector risk.

I don't like much about Jim Cramer but I do like the fact that he knows a little about a lot of stocks. Someday I hope to copy that trait.

1 comment:

Jimmy said...

This is an awesome post, and the best you have written so far in my opinion. Great analysis and I love that you were listening in to the conference call and started thinking about what the things they mentioned would say about other companies.

If I was the shorting type, I would definitely have to take a strong look into that. Very logical, very profession. Keep up the great work!