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5 Apparel Stocks That Could Pop in 2012

Stocks in this article: COLM ICON VRA CAB BKE

Vera Bradley

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Even though Vera Bradley (VRA) has only been public for a year and change, this $1.4 billion stock has gotten plenty of eyes on it. Management took advantage of significant popularity in VRA's product line to IPO the firm -- but there's still value in this name.

Short-sellers' eyes are on Vera Bradley too; with a short ratio of 14.4, it would take nearly three weeks of buying for shorts to exit their positions at current volume levels.

Vera Bradley has an instantly recognizable style, something that the firm has done a good job of leveraging in the last few years. Today, VRA sells women's accessories through more than 3,300 independent retailers as well as a growing contingent of company-owned retail stores. The latter should provide VRA with considerable room for domestic growth while most peers are struggling to establish their brands abroad.

If imitation is the sincerest form of flattery, then Vera Bradley should be quite flattered -- competitors have been quick to copy the firm's signature style. To date, they haven't been able to copy VRA's success. Authenticity counts in the apparel business, and Vera Bradley's first-to-market status should help the firm retain the edge on competitors who want part of its broad demographic.

Financially, VRA carries a manageable revolving debt load that's been shrinking as the firm simultaneously builds a more suitable cash reserve. Deep margins should keep that trend moving along in 2012.

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