4 Stocks Ready for 2013


Richard Moroney Image Richard Moroney Editor, Dow Theory Forecasts

This diverse quartet is already showing signs of life, but there's plenty of headroom left if you're not in them yet, notes Richard Moroney of Upside.

Women's apparel retailer Ann (ANN) operates nearly 380 Ann Taylor locations and more than 600 Loft stores in 47 states and Canada. Favorable pricing and an improved product mix have bolstered sales and profits. October quarter earnings jumped 25% and outstripped the consensus, helped by stronger profit margins and improved same-store sales at both of its brands.

Shares have retreated 15% since hitting a five-year high in September, partly reflecting concerns regarding a sluggish holiday shopping season. But an improving employment picture and ongoing economic recovery bode well for consumer stocks. Ann's per-share earnings are expected to be up 34% to $2.27 for fiscal 2013 ending January.

The consensus calls for profit growth of 16% in fiscal 2014-a conservative estimate given recent results. Considering Ann's growth outlook, healthy cash flow, and strong balance sheet with cash of nearly $3.50 per share, the stock seems reasonably valued at 13 times expected 2014 earnings. Ann, with a Quadrix Value score of 77, is being initiated as a Buy.

Grand Canyon Education (LOPE)
This marks Upside's return to the for-profit college space.