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Strategies & Market Trends : Value Investing
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To: sjemmeri who wrote (21349)5/20/2005 2:04:15 PM
From: David  Read Replies (1) of 78530
 
Still holding ANF since it was first mentioned here in 1999. Continue holding because underlying fundementals steadily improving, various discounted cash flow valuations, with wide ranging valuations, leads me to conclude the company is fairly priced to mildly undervalued, no other investement alternatives at present, and, further to avoid paying capital gains.

P/S ratio is a bit rich these days. The company generates lots of cash flow and has a clean balance sheet. Whether this trendy retailer continues bucking the trend is always the question.

To my amazement, Value Line purchased ANF for its Portfolio 1 (That is VL's pics with above-average year-ahead price potential). VL notes ANF's strong earnings growth over the past few years and believes near term financial performance will "likely stay with the established trend." They also note good demand for the company's traditional merchandise and also the Hollister Division "ramping up nicely."

I don't consider ANF a value stock and view it as a Buffetology pick. High returns on invested capital without incurring debt. I am unsure whether one can say that ANF has a sustainable competative advantage. I always ask myself where ANF will be in 20 years?

Management has steered ANF through many turbulent times while increasing earnings at a 15%-20% clip which leads to some confidence in what the company is doing and will continue doing the future. The new Holinger concept seems to be successful and is the company's main source of growth. There is also another concept, Rhule (sp) that the company is experimenting with and could be a good source of future growth. Meanwhile, the original chain seems to be maintaining well lately.
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