Marc Lichtenfeld
The price-to-earnings-to-growth ratio also is ahead of the 1.3 times industry average. Does Coldwater deserve a 40% premium over Abercrombie & Fitch (ANF Quote - Cramer on ANF - Stock Picks)? I don't think so.
Given the valuation, it's apparent the stock is fairly priced and that any stumbles should send shares closer to the averages. I don't like to use the worn-out term "priced to perfection" too often, but it's applicable in this case. Coldwater has plenty of supporters. Stanford Group's Marc Bettinger, who rates the stock a buy, appreciated the company's "strong performance in a still-difficult market for women's apparel and the resultant confidence in the resilience of the business model," he wrote after the earnings release. I, too, was impressed by the report, and if traffic picks up, Coldwater's recent performance makes it a leading candidate to be a category killer. If it can perform as well as it did in a difficult environment, it should go gangbusters when skies are blue. But a lot of people are calling for thunderclouds over consumers' heads. I am not necessarily one of them, although I do have to acknowledge that the possibility exists. Other than a best-case scenario where shoppers are buying with fervor, I doubt that Coldwater can live up to the lofty expectations. Traffic would have to go through the roof for there to be meaningful upside. The more likely case is that the company will continue to execute in a difficult environment, earning respect from analysts and media alike, but not necessarily returns for shareholders. Wait for traffic to return before dipping a toe into this water.
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