American Eagle Outfitters (NYSE:AEO)

CAPS Rating: 3 out of 5

The Company designs, markets and sells its own brand of laidback, current clothing targeting 15 to 25 year-olds, providing high-quality merchandise at affordable prices.

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Player Avatar TMFMMTInvestor (47.87) Submitted: 8/8/2010 4:31:57 PM : Outperform Start Price: $10.77 AEO Score: +65.31

Don't much like AEO as a company/haven't shopped there in years, but it's a pretty good undervalued retail play: ZERO debt/equity, been raising the divvy consistently the last 5 years, low fwd P/E and P/S, 3.5% dividend is well below its 5-yr avg and w/ a conservative payout ratio, and nearly $700 million in cash/cash equivalents on hand w/ only $30 million in short-term debt. Free cash flow should recover over time. Key inside ownership around 1.6% of shares outstanding = $40.55 million. Wouldn't buy it in a real portfolio, though--just not my style.

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