Do PVH, AEO at 52-Week High Have Propensity to Move Higher?

Possibilities of a U.S.-China trade war have created a chaotic situation, compelling investors in the Wall Street to play safe. Ignoring the market jitters, a few stocks have managed to reach a pinnacle or more specifically hit a 52-week high. Here we have highlighted two such stocks — PVH Corp. PVH and American Eagle Outfitters, Inc. AEO — which scaled a 52-week high on Apr 5 and have outperformed their respective industries in the past three months.

Let’s analyze whether the momentum these stocks have shown is sustainable.

What’s in Favor of PVH Corp?

PVH Corpscaled a new 52-week high of $160.22, closing a tad lower at $159.51. The Zacks Rank #3 (Hold) stock is gaining investor confidence on superb earnings history and brand strength. The stock has rallied 11.8% compared with the industry’s gain of 4.4% in the past three months.

PVH Corp’s diversified brand portfolio lends it an edge over peers, allowing it to generate above-average industry growth and sustain its position in a challenging environment. The company’s approach to brand management helps each of its brands grow through efficient marketing strategies. Based on the strength of many of its brands, particularly Tommy Hilfiger and Calvin Klein, coupled with opportunities with regard to distribution, we believe that the company is poised for long-term growth.

 

Also, the strong guidance instills confidence. For fiscal 2018, the company projects revenue growth of 7%, while constant-currency revenues are expected to improve 4% from fiscal 2017. Management envisions fiscal 2018 adjusted earnings per share in the range of $9.00-$9.10, compared with $7.94 last year.

Given the company’s strong fundamentals, we expect PVH Corp to scale higher in the coming days. Notably, the stock shares space with Delta Apparel, Inc. DLA.

Are Solid Comps Driving American Eagle Outfitters?

American Eagle reached a new 52-week high of $21.35 on the day, closing the session at $21.25. The stock has gained 18.4% over the past three months, compared with the industry’s gain 0.8%. The outperformance can be attributed to the company’s solid comparable store sales (comps) trend, which continued in third-quarter fiscal 2017 and through the holiday period.

The third quarter marked the company’s 11th straight quarter of positive comps, which rose 3%. Key factors driving this trend are solid online sales, strength in both American Eagle and Aerie brands, improved in-store traffic and favorable product mix. Among the company’s brands, Aerie has delivered comps growth for 14 straight quarters.

This Zacks Rank #3 (Hold) company strives to develop its omni-channel platform to better reach customers. Hence, the company has been upgrading its website as well as mobile app. Backed by these efforts and efficient digital marketing endeavors, American Eagle’s e-commerce sales contributed about 25% to third-quarter fiscal 2017 revenues. Strong online sales at both brands also drove comps. We believe the plans for omni-channel growth open up significant opportunities for the company to expand its business and meet the rising global demand for its products.

We are also encouraged to note that American Eagle, which shares space with The Buckle, Inc. BKE plans to focus on strengthening its product assortments by adding more brands, managing inventory levels and enhancing e-commerce capabilities. The strategic initiatives to boost its top line are expected to propel the stock higher as well.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

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American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
 
Buckle, Inc. (The) (BKE) : Free Stock Analysis Report
 
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