Tuesday, April 21, 2009

The Lagging Tween

Maybe this Tween just isn't that good in school or maybe the market knows something that we don't. Tween Brands (TWB) has greatly underperformed the market in this huge rally. Both pre-tween retailers GYMB and PLCE have both rebounded strongly over their 200ema and even hated retailers like SHLD, JCP, and M are all above those marks as well. Then why is TWB now even below the 20/50ema's? On a valuation basis, this stock provides a compelling story. Even on a business plan basis, this stock seems much more attractive then the other mentioned stores. Just using the most common comparisons of GYMB and PLCE, the movement away from the mall seems to give them a leg up. Maybe the market seess execution risk in moving from the Limited Too mall brand to just a Justice only brand. The Q4 margins were probably a good reason to pause, but most of that issue was related to the sell out of the Liimited Too clothing line.

TWB has been a very well run company for a while now so it seems illogical to think they'll struggle to escape this downturn worst off then others. They seem like a good bet with support at $2. We purchased shares in our fund unfortunately prior to the huge selloff on Monday and we are looking to add more at these levels.

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