Claire time!
Magic 25
Dec 30, 1999
Claire's Begins to Rise
Senior Analyst: Adam Lowensteiner (12/30/99)
Claire's Stores (NYSE:CLE - news) stock continues to rise during a low-volume week on Wall Street. There is no apparent driver of the stock, but it could be related to strong holiday sales. The stock had been stuck in the $20-22 range for most of the last two months, so a breakout toward the mid-$20's is a welcome sign for investors.
Strong monthly sales would certainly be the elixir for the stock price. Claire's management has been working hard to post consistent comp store growth, which has been either flat or in the 2-3% range. Official sales figures should be released Thursday, January 5th. We expect the trinket retailer to post around 3%, and would be surprised to see a higher figure. The company posted 12% comps in December of last year, creating difficult comparisons.
The stock may also be moving in sympathy with other brick-and-mortar retailers. Some have concluded that e-tailers did not take as large a bite out of sales as had been previously forecasted. In addition, strong consumer economic figures lend a rosy glow to the entire retail landscape. Across the board many retailers have seen some positive moves, including Wal-Mart (NYSE:WMT - news) .
If Claire's can report some solid numbers next Thursday, shares could continue to climb. We tend to believe shares are still a good value at $23, as the company should earn about $1.75 a share this fiscal year, ending January 31, 2000. If Claire's meets or beats that estimate, then it would reveal earnings growth of about 20%, while the stock only trades 13 times that estimate.
Analyst: Adam Lowensteiner
Updated on 12/30/99 with CLE at $23.00
Recommended 12/11/99 at $21.19
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