Are These 3 Stocks Buyout Targets?
Recently, analyst firm Jefferies listed several retail stocks as top leverage buyout, or LBO, candidates. Basically, the analysts think the stocks have gotten so cheap that private equity will take them private via borrowing debt to restructure and hopefully create value.
Jefferies thinks that Aeropostale (NYSE: ARO ) , American Eagle Outfitters (NYSE: AEO ) , and Body Central provide interesting values with high internal rate of return, or IRR, and limited debt. The only problem is that the teen retail segment has become highly competitive, with numerous players that can easily compete online with cloud software tools and social media advertising.
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