1. Abercrombie & Fitch Co. (NYSE:ANF)
PE Ratio (FWD): 13.96
Number of Hedge Fund Holders: 48
Abercrombie & Fitch Co. (NYSE:ANF) started as an outdoor specialty retailer in 1892. It has now grown into an international lifestyle brand, famous for its youthful and casual style, primarily catering to teens and young adults but also has offerings for the rest of the population as well. It also operates several sub-brands, such as Abercrombie Kids, Hollister Co., and Gilly Hicks, which offer a wide range of products, including loungewear, activewear, outerwear, sleepwear, and personal care items.
As of 2023, the company operates over 760 stores across the Americas, Europe, Asia, and the Middle East and also has a significant online presence. On its investor day in June 2022, it announced its “Always Forward Plan,” which aims to accelerate global growth and enhance shareholder value through a focus on omnichannel strategies and digital expansion.
The plan set financial targets for 2025, with projected revenues between $4.1 billion and $4.3 billion, and a sustainable operating margin of 8% or higher. Long-term goals include reaching $5 billion in revenue with a 10% operating margin.
The Always Forward Plan was built on three core strategies which include expanding brand growth, accelerating a company-wide digital shift, and maintaining financial discipline. Abercrombie & Fitch and Abercrombie Kids aim for 6-8% sales growth, while Hollister expects 0-2%, and Gilly Hicks is targeting a 15% growth rate by 2025. The company also plans to generate a minimum of $600 million in free cash flow by fiscal 2025.
Abercrombie & Fitch (NYSE:ANF) tops our list of 7 cheap small-cap stocks to buy now as its stock was held by 48 hedge funds, at a combined value of $1.306 billion, according to Insider Monkey’s database.
As of September 27, the company is trading at cheap forward earnings multiple of 13.96x, at a nearly 20% discount to its sector median. Moreover, analysts expect significant growth in the company’s EPS with a nearly 65% increase in its 2024 earnings compared to the last year.
For the stock price, according to the consensus estimates of 10 analysts, Abercrombie & Fitch (NYSE:ANF) has an average price target of $190, representing an upside of 31.49% from current levels.
Carillon Tower Advisers stated the following regarding Abercrombie & Fitch Co. (NYSE:ANF) in its Q2 2024 investor letter:
“Abercrombie & Fitch Co. (NYSE:ANF) is a global multi-brand omnichannel specialty retailer that offers a broad assortment of apparel, personal care products, and accessories for men, women and kids. The stock was a strong performer during the quarter following an impressive earnings report that exceeded expectations and raised guidance amid a rough patch for the retail industry. The management team has made powerful strides in reenergizing the brand and transforming the concept to a different and larger audience.”
While we acknowledge the potential of Abercrombie & Fitch Co. (NYSE:ANF) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ANF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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