3 'Pants on the Ground' stocks to buy now

The latest viral video sensation could create a run on pants, and a recovering economy should help these 3 hip clothing stocks.

By InvestorPlace Jan 21, 2010 1:27PM

By Louis Navellier

 

You may look like a fool with your pants on the ground, but the latest viral video sensation -- "American Idol" contestant Gen. Larry Platt singing his hit song "Pants on the Ground" -- might turn into an anthem for American youths.

 

Parental lamenting about kids with pants that hang too low will have little impact on a fashion trend that is likely to continue for some time. If anything, the popularity of the song will have the opposite intended impact.

 

Kids love this song and are more likely to keep wearing their pants low to the ground as a result. Even future Hall of Fame quarterback Brett Favre recently got in on the act with his celebratory version of "Pants on the Ground."

 

All this attention is making somebody very happy. That somebody is likely to be the retailers and makers of pants that cater to the young and the hip. I’m sure if I were at that age I would be running to the stores to get a pair so I too could have my pants on the ground.

 

What stocks could get a boost from a run on pants?

 

Here are three ideas to consider:

 

Aeropostale Inc. (ARO)

 

If you want jeans and you like them cheap, you have to check out Aeropostale Inc. (ARO).


The hip retailer is a big hit with the budget-conscious youth shopper looking for trendy but cheap. Because of this focus on thrift, the company has withstood the worst recession in decades in fine form.

 

At $34.50, shares trade above levels reached before the crisis started in late 2008. Indeed, the stock sold off initially, but shares have recovered on the strength of operating performance. At current levels shares are just over 10 times current year earnings estimates. That’s cheap considering the economy strengthening will likely help sales and profits at the company.

 

The Buckle (BKE)

 

If you are looking for hip denim products, head over to The Buckle (BKE). The former Mills Clothing Inc. has built a powerful retail presence over the last two decades operating approximately 400 locations across the country.

 

Like ARO, BKE shares have recovered from lows reached last March, but are below levels reached in May. The stock is essentially trading sideways for much of the last few months as traders speculate about the future. Mainly, will earnings growth support a higher stock price?

 

At the moment, analysts expect flat growth from current year ending January to next year. A "pants on the ground" rally may help the company deliver stronger operating results. If so, this stock goes higher.

 

Carter's (CRI)

 

Do you want junior to have his or her pants on the ground? If so, get on over to Carter’s (CRI). The apparel company for babies and young children has a wonderful selection of denim products that would make General Larry Platt proud.

 

In fact, Carter’s is from the General’s home town of Atlanta. If they are smart they will sign a deal with Mr. Platt to market its products. But that may be asking a bit much ...

 

How does CRI stand on its own? Shares have nearly doubled since bottoming in March, and rightly so. The stock is still cheap considering analysts are expecting double-digit earnings growth in the next year. Buying at 12 times earnings today makes sense.

 

"Pants on the Ground" is a great little ditty that looks to have staying power. If that staying power results in more purchases of jeans or other pants, then these three stocks will benefit. At a minimum, these companies and one more are poised to benefit from a growing economy. (Get another hot pants stock here.)

 

Related Articles:

At the time of this writing, the author has a position in ARO.

 

 

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