Top Retail-Industry Bet: Denim Stocks

1. The Buckle(BKE) sells mid-priced jeans through company-owned stores. It conducts purchasing, marketing and distribution from its headquarters in Kearney, Neb. February same-store sales jumped 5.1%, more than three times the consensus estimate.

Quarter: Fourth-quarter profit advanced 23% to $42 million, or 90 cents, as revenue gained 9.2% to $274 million. The Buckle's operating margin expanded from 22% to 25%. Its balance sheet stores $158 million of cash and no debt.

Stock: The Buckle has appreciated 20% in the past year, lagging behind U.S. indices. The stock trades at a price-to-projected-earnings ratio of 12, a 32% discount to the industry average. Shares are expensive based on book value and sales.

Consensus: Of researchers covering The Buckle, six rate its stock "buy," seven rate it "hold" and four rank it "sell." Sidoti & Co. projects the stock will climb 31% to $47. Small-cap money manager Royce & Associates controls 15% of the float.

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