3 Elegantly Appointed Retailers
Sometimes it's the practical that is far more attractive than the extravagant, and this trio of retailers make that point abundantly clear when it comes to their stocks, writes John Reese of Validea Hot List.
Our approach is to buy stocks using investment models that are based on the strategies of longstanding experts.
Guess? (GES) earns a 100% score on our Benjamin Graham screen. Guess? designs, markets, distributes, and licenses apparel and accessories for men, women, and children.
To pass the Ben Graham value model, a stock's current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. GES's current ratio of 2.8 passes the test.
Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. GES's EPS growth over that period of 2,964.3% passes the EPS growth test.
The Price/Earnings (P/E) ratio, based on the greater of the current P/E or the P/E using average earnings over the last three fiscal years, must be "moderate," which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. GES's P/E of 9.55 (using the current P/E) passes this test.
The Price/Book ratio must also be reasonable.