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Apparel Stock Short-Squeeze Opportunities

Vera Bradley

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A relatively recent IPO, Vera Bradley (VRA) has made an impressive run for investors who decided to take on a position right after shares hit the market. The $2 billion apparel and accessory company, one of the 10 best-performing IPOs of 2010, has seen shares rocket 94% since the stock started trading back in late October.

Naturally, that performance has attracted short-sellers to this stock, bringing VRA's short ratio to 7 -- but bets against this stock's performance may be misplaced.

Related: 20 Highest-Yielding Retail Stocks

Vera Bradley has been undergoing some impressive growth in the last several years, building out retail stores and growing the geographic footprint of its affiliate retail base at the same time. VRA has been extremely successful at targeting trendy middle-class women with its line of accessories (much like higher-end Coach (COH) did in the height of the recession) and has used that success to expand its offerings to include a wider array of products.

Ultimately, the key to growth will likely be through its own retail stores -- but the road to a larger VRA won't be easy. As long as management continues to focus on keeping average revenues per square foot higher than peers, instead of simply growing its store count, this stock should continue to enjoy sustainable growth for some time.

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