| David Kingston: Investors May Find Coldwater Creek Attractive After Recent Drop |
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| Saturday, 01 September 2007 | |
David Kingston: Investors May Find Coldwater Creek Attractive After Recent DropLOS ANGELES, CA (NAMC) (August 31, 2007)- The women's retail chain that caters to the 35 and up demographic has hit a snag in their stock price over the past year and yesterday that gap widened. Coldwater Creek, Inc (NASDAQ: CWTR) announced late Wednesday that their second-quarter net earnings were $8.7 million, or 9 cents a share that is compared to $12 million, or 13 cents a share, during the same period a year ago, down close to 28%. Their revenue for the quarter which ended on August 4, 2007 was actually up 17% to $253.5 million from $216.4 million for the same period a year ago. The average analyst estimate was 12 cents per share based on $266 million in revenues. This sent the stock tumbling down for most of Thursday, finally closing down $4.51 to $12.88 or over 25% in one trading session. The stock over the past 52-weeks is down from $31.25, so a drop well over 50% to date. So let me tell you what Coldwater Creek does and then give you my outlook on the company as this latest drop has actually made the stock a bottomfishing opportunity. Coldwater Creek Inc. is a specialty retailer of women's apparel, accessories, jewelry and gift items, they cater to the 35 and over crowd. They have two areas, and that is retail and direct marketing, beyond the retail outlets they also have day spa locations, which is interesting. The direct marketing has to do with their e-commerce website and catalog business. Now Coldwater Creek is far from an American Eagle Outfitters (NYSE: AEO) or an Abrecrombie & Fitch (NYSE: ANF), they do not cater to the highly desireable demographic of teens,tweens and young adults, unfortunately. But they do have a niche and actually compete against the likes of Chicos (NYSE: CHS) and Talbots (NYSE: TLB), both of these stocks felt the wrath of investors this week. Now at $16 or $17 per share I was not a big fan of Coldwater Creek but this drop yesterday, be it on earnings news, can be considered a golden opporunity for investors looking to pick up cheap stock of Coldwater Creek. Their earnings missed the mark but their revenue has grown, they are opening new locations, and the most important factor that Lou Victor brought up yesterday with his outlook on Sears Holdings (NASDAQ: SHLD) is that we are headed into the holiday months where retailers typically shine. Coldwater Creek under $14 is a bargain as we head into the final quarter of the year. This downward turn in the stock price is a combined effort of lower than expected earnings for the quarter and the shorts just having a field day with the stock. Also bare in mind that we are headed into a three day weekend, alot of big players that have had a hard time of getting away this summer are taking this opportunity to do dso , this means that the buyers are on a skeleton crew and the shorts know this and are taking the opporunity to capitalize, really who could blame them, but remember that they will have to cover some time. This little downturn is a positive for investors in my opinion, as Coldwater Creek could very well bounce back up to the $17 range in short order after the long weekend.
NAMC Newswire Note: NAMC Worldwide provides Investment Banking consulting services to both publicly traded and privately held companies, everything from capital raising to mergers and acquisitions. Other areas of focus are Private Equity Capital Raising and Private Commodity Transactions. This article can be republished either online or in print as long as credit is given to the author and the NAMC Newswire. |
