Top picks 2012: G-III Apparel Group
Good earnings, Calvin Klein expansion and short interest could spur a rally.
By Todd Salamone, Schaeffer's Investment Research
In early December, G-III Apparel Group (GIII) reported quarterly earnings of $2.16 per share as year-over-year revenues rose 13.3%.
Earnings topped estimates of $2.14 per share, after two quarters in which G-III missed estimates. Additionally, the company announced an agreement to open Calvin Klein Women’s Performance stores in the U.S., China and other countries throughout the world.
G-III shares responded favorably to the earnings and licensing news, which could be the catalysts for a turnaround play in the stock in 2012, following a dismal performance in the last seven months of 2011.
From a technical perspective, we view the November/December low at the 80-month moving average as a potential pivot point, as the trendline supported the stock in 2002-2003 and again in 2004-2005.
The latest news also pushed the shares back above the $22.50 area, which is half G-III’s all-time high set in April 2011 and such levels often provide strong support.
With G-III’s short interest near all-time highs after a pullback to long-term support and favorable catalysts heading into 2012, G-III is an attractive speculative play.
A short-covering rally in 2012 could rejuvenate G-III shares, which are still up by more than 500% over the past ten years.
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