10 Stocks Jim Cramer Can’t Stop Talking About

5. Abercrombie & Fitch (NYSE:ANF)

Number of Hedge Fund Investors: 48

Jim Cramer notes that Abercrombie & Fitch (NYSE:ANF)’s stock dropped 17.7% on Friday despite reporting strong earnings. Abercrombie & Fitch (NYSE:ANF) posted an 18% increase in same-store sales and a 21% rise in revenue, with earnings of $2.50 per share, exceeding expectations of $2.22. This represents a significant 127% growth in earnings year-over-year.

“ANF stock plunged 17.7% today despite reporting what I thought was a pretty darn good, solid set of numbers. ANF had 18% same-store sales growth, higher than expected. 21% revenue growth. They earned $2.50 per share. Street was only looking for $2.22. That’s 127% earnings growth year-over-year. Hey, kind of like NVIDIA!

The company even raised its full-year sales forecast aggressively, also boosted their operating margin guidance. So what was the problem then? Well, the sellers seemed to focus on three words from an otherwise positive quote from ANF’s—well, let’s just say really—CEO. She has the place so well-run, Fran Horowitz, and she wrote the words “increasingly uncertain environment” into the call. And while the updated full-year forecast was terrific, the forecast for the current quarter represented a deceleration from the results they just reported.

Hey, look, frankly, I’m grasping. They’re the only explanations I can find for this selling, and I don’t think it’s convincing. Abercrombie is giving conservative quarterly guidance in a tough operating environment, and with football season on the horizon, let’s just say I take the over on the third quarter outlook.”

Abercrombie & Fitch (NYSE:ANF), with its effective brand overhaul, solid financial results, and successful digital strategy, is an attractive investment. Abercrombie & Fitch (NYSE:ANF) has transformed its image from a “preppy” style to one that is more inclusive and diverse, helping it attract a broader and more loyal customer base. In Q2 2024, Abercrombie & Fitch (NYSE:ANF) saw a 16% increase in net sales, reaching $935 million, thanks to improved gross margins, higher full-price sales, and strong performance from the Hollister brand. Abercrombie & Fitch (NYSE:ANF)’s digital strategy has been fruitful, with e-commerce now a significant revenue source.

Additionally, Abercrombie & Fitch (NYSE:ANF) is smartly expanding its physical presence by opening new stores in key areas while closing less successful locations. Its commitment to sustainability and corporate social responsibility also adds to its appeal. With strong financial health, a successful rebranding effort, and a focus on digital growth, Abercrombie & Fitch (NYSE:ANF) is well-positioned for continued success in the retail market.