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EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Today's Dead Cat Bounce Stock Is Aeropostale (ARO)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Aeropostale ( ARO) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Aeropostale as such a stock due to the following factors:

  • ARO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.5 million.
  • ARO has traded 313,346 shares today.
  • ARO is up 3% today.
  • ARO was down 5.1% yesterday.

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More details on ARO:

Aeropostale, Inc., together with its subsidiaries, operates as a mall-based specialty retailer of casual apparel and accessories. Currently there are no analysts that rate Aeropostale a buy, 2 analysts rate it a sell, and 17 rate it a hold.

The average volume for Aeropostale has been 3.0 million shares per day over the past 30 days. Aeropostale has a market cap of $575.4 million and is part of the services sector and retail industry. The stock has a beta of 2.68 and a short float of 36% with 6.94 days to cover. Shares are down 19.4% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Aeropostale as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • AEROPOSTALE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, AEROPOSTALE INC reported lower earnings of $0.43 versus $0.86 in the prior year. For the next year, the market is expecting a contraction of 355.8% in earnings (-$1.10 versus $0.43).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 202.7% when compared to the same quarter one year ago, falling from $24.95 million to -$25.62 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, AEROPOSTALE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AEROPOSTALE INC is rather low; currently it is at 20.17%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -4.97% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$8.54 million or 111.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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