Every week, I run a proprietary scan of stocks that fit a strict set of fundamental and technical criteria. The primary goal isn't necessarily to find great stocks - there are esier ways of doing so. The goal is to find great stocks that I wouldn't have found otherwise. This week's top dog was not-entirely-obscure True Religion Apparel, Inc. (NASDAQ:TRLG).
True Religion Apparel is makes and sells - through its own retail stores - trendy apparel. Though the company is best known as a denim-focused clothing, its product base is pretty well diversified into all sports of casual wear.
Earnings have been.... just so-so of late. Though TRLG is profitable, earning $0.53 per share for the past four quarters, the company has seen no earnings growth since 2008.
That's not the tripwire for newcomers though. In fact, despite the company's lack of earnings-growth, the stock is a compelling buy. The tripwire for newcomers (in buying the stock) is getting past the extreme volatility True Religion Apparel shares have a bad habit of dishing out. And to do that, you need to take a step back. A big step back.
The nearby weekly chart of TRLG partially illustrates why, but to fully appreciate the upside here, check out this longer-term weekly chart. Both charts show a lot of big ups and downs every few months. It's the long-term chart, though, that confirms the net-effect of all those ups and downs is still a bullish one. Since 2007, True Religion Apparel, Inc. shares are up 40%, and still going strong.
And the "still going strong" part is what put the stock back on my radar today.
As was noted above, the stock-scanning system I'm using here has a technical (chart-based) component to it. That criteria is, in simplest terms, a hint that bullish momentum is brewing again. We've got that with TRLG. The stock actually pushed above its 100-day and 200-day moving averages in mid-February. They pulled back [true to their habit] over the next few weeks, but this week the stock pushed off that critical 200-day moving average line to renew the bigger uptrend that's been in place since late 2012.
If this bullish burst is like most of the once True Religion Apparel has made in the past, we should see a multi-week rally unfold here. It's worth a swing anyway, if you're willing to stick with it for a while.
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