Aritzia Inc. (ATZ.TO)

A classic growth stock. If it traded in the US it would trade way higher. The brand has cachet and desire. Massively understored in the US. The company that funded it in the early stages sold it aggressively and that was a problem for the stock performance. Sales growth at 15% per annum, earnings at 20% per annum. He wouldn’t be surprised to see it at $26. (Analysts’ price target is $21.43)

This is a growth company, growing at about 20% per year. They sell “inexpensive luxury” clothes to the 15-to-45 year old demographic. (Analysts’ price target is $19.44)

He is waiting to buy it when the stock price stabilizes and when the analysts’ expectations come down a bit. They only have 80 stores and they have three different brands. They envision becoming a world-wide brand. $11.60 could be the new bottom, but there is a downward momentum that must break.

He likes this. Every time he goes to the mall, these stores are full, while competitors’ stores are empty. It was probably priced aggressively when it was sold to the market, because it was an exciting growth story. Then we got into Amazon, and everybody hates retail, which is what has really hammered this company. He would buy a little now and a little next month. One of the insiders just made a big purchase.

Retail is not an easy place to make money, this is one of the few. Went public earlier this year and have done reasonably well. They are in the retail and fashion business, and have done very well coming out of a private company basis, to manage the fashion risks. The footprint is still rather small and there is room to expand both in the US and Canada. He sees a lot more potential, but this is not a cheap stock. However, the growth more than justifies that.

This has had tremendous success over the last 32 years. It has grown revenues by 21% compounded over the last 10 years. Has a very interesting model, where they take in 2 of their most popular labels, and create an entire new store around them. Only has 76 stores and are expanding into the US. Probably not the best time to buy because they’ve just had 2 very strong years of results. The fashion industry is fickle. The valuation today is assuming that the strong sales are going to continue year after year after year. However, in 2014 they had same-store sales of -4.9%. You should wait for a valley to buy. A better choice today would be Lululemon (LULU-Q).

(Market Call Minute.) Great fashion brand, but it’s a Hold as retailers are a difficult place to play.

Same store sales growth is 16.9%. 4 to 5% is normally not a bad number in retailing. It rose only a little after the IPO.