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Could this be the next 1,172 Bagger?

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January 08, 2010 – Comments (5) | RELATED TICKERS: JOEZ , GPS , TRLG

I recently wrote about the sad true story of how I bought The Gap (GPS) in 1978 and sold it a few months later for a 33% profit. I missed out on over $1 million in long term gains. If I had just kept the stock I could have turned $900 into $1,055,128.37 in 22 years. That figure doesn’t even include the dividends I could have earned and reinvested! I started shopping at the Gap in 1974 when they only had about 7 stores; they now have 3,149 stores worldwide.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=295293&t=01008343660826439790

In the first Blog I ever wrote here at CAPS, I mentioned 2 stocks, one of them was Joes Jeans (JOEZ). Their current P/E is 16.63, Price/Book 2, and Price/Sales 1.18. Sales for the most recent Quarter were up 16.40% vs. the previous year, compared to the industry average of -1.90%. So despite the worst Recession since the 1920’s Joes continued to thrive. CAPS user “Peterod” also wrote about this stock recently, picking it as his stock of the year.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=319649&t=01003888608711350236&source=itxsitmot0000001&lidx=1

When I first bought the stock last year for $0.60 they had 4 stores. This week I noticed that their stock has been performing nicely. It closed yesterday at $1.43, up 16.26% in 5 days. I looked at recent news stories and saw that they had just opened their 6th retail store. I also read a story where it was mentioned that the company planned to open 5 more stores in 2010.  They currently sell most of their clothes through Department stores Macy's, Neiman Marcus, Nordstrom, Saks Fifth Avenue, Von Maur, Lord & Taylor, Dillard's and Belk stores, and several specialty retailers.  They plan to get most of their future growth from opening more retail stores. Recently the CEO/President Marc Crossman said:

 "Our retail division has been performing well as evidenced by a 176% same store sales increase on Black Friday. In addition, we continue to see a very positive same store sales trend throughout December. We look forward to building upon this success in 2010 as we plan significant growth for our retail division with the opening of new stores in locations throughout the country."

Joes managed that 176% same store sales increase despite the fact that average retail sales for that day were only up an average of 0.5% nationwide according to Shoppertrak.

 http://www.shoppertrak.com/black-friday-retail-sales-increase-05-percent-compared-2008

The company has also said that they plan on increasing their presence in Europe this year. They currently sell internationally to the following retailers: Galleries Lafayette, Le Bon Marche, and Le Printemps in France, Barney's Japan, Isetan, and Mitsukoshi in Japan, Top Shop, Harvey Nichols and Selfridges & Co. in the United Kingdom, Ztampz in Hong Kong and Gio Moretti in Italy.   Have you ever looked at their website? Their website has shown such things as models who have entered the companies modeling competition, 2 women and a man Lying on a bed taking pictures (what's up with that?), and now a woman changing into various Joes Jeans fashions in the changing room. Seems their marketing is very unique.

http://www.joesjeans.com/

 

Today Joes announced that they will be presenting at the 12th Annual ICR XChange Conference next week. According to the ICR Xchange website this “is one of the preeminent investor conferences in the industry and is open to institutional portfolio managers & analysts, sell-side research analysts, investment bankers from sponsoring firms, private equity, select media, and invited guests of ICR.”

 So what do you think? Could this company be the next Gap (GPS), or at least the next True Religion (TRLG)?  Chances of a 1,000 bagger are slim but how about a 10 bagger? Please tell me what you think. THANKS!

5 Comments – Post Your Own

#1) On January 08, 2010 at 11:12 AM, lorteungen (99.69) wrote:

I think it looks interesting and may be worth a shot, but the long term chart looks a little troubling. Has this company really been in business since 1991? Do you know anything about their "pre-history". Dilution seems to have been crazy for the last 10 years.

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#2) On January 08, 2010 at 12:31 PM, 20PercentPM (< 20) wrote:

lorteungen,

The only thing I know about the company history is that they used to be called Innovo group. On yahoo finance it says they were founded in 1987. How much dilution did you discover over the last 10 years?

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#3) On January 08, 2010 at 12:58 PM, lorteungen (99.69) wrote:

I haven't done extensive research or anything, I just looked briefly at the numbers here: 

http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=joez&lstStatement=10YearSummary&stmtView=Ann 

It seems that shares outstanding increased from 7 million to about 60 million in the period. There does seem to be a momentum building in sales, I just wish I had discovered them at $0.60 as well...

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#4) On January 08, 2010 at 1:40 PM, 20PercentPM (< 20) wrote:

Thanks for that link! That's really cool. I've been to msn money thousands of times but never noticed that link. Tons of useful 10 year info there. It looks like dilution really slowed down the last 3 years. Only 640,000 more shares outstanding in that time.

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#5) On January 11, 2010 at 10:08 AM, peterod2 (< 20) wrote:

Fresh 52 week high today!  Get ready to pull the buy trigger for Caps as this crosses 100 million market cap this week!

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