Abercrombie & Fitch Co. (ANF), Guess?, Inc. (GES): Which Clothing Retailer Is The Best Investment, If Any?

3.)    American Eagle Outfitters (NYSE:AEO) – This is one of the few clothing retailers that is actually up over the past year, from $14 to around $20 currently.  American Eagle was “fortunate” in that it experienced greater declines during the 2008-09 recession than its peers, and was forced to revamp its business a few years ahead of the rest, investing large amounts of their resources in developing new and exciting apparel and accessories.  The difference between American Eagle and the others is that there is a clear upswing in earnings and revenues, which is why the shares have increased so much.  American Eagle trades at 14.4 times forward earnings, and has an even better balance sheet than the other two, with $745 million in cash and no debt.

Conclusion

To sum it up, American Eagle Outfitters seems to be the safer and more practical long term investment of the three.  I like how they have already shown the market that their efforts to improve their business have been effective and they still trade at a very modest valuation.

While it is true that investors could be handsomely rewarded from an investment in either of the other two names mentioned here, it seems like an unnecessary risk with attractively-valued alternatives like American Eagle Outfitters.

The article Which Clothing Retailer Is The Best Investment, If Any? originally appeared on Fool.com.

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