Don't Forget to Mind the Gap

Don't get me wrong -- I'm not all that sanguine about the near-term prospects for Gap(GPS Quote). After all, the company has reported absolutely horrific same-store-sales numbers for the past several months. Plus, it's been forced to mark down prices pretty aggressively just to get people to go into its stores. Still, I can't help but think that the stock is probably oversold at this point.

Why?

Keep in mind that management has actively sought to trim expenses during these trying times. By discounting slower-moving merchandise, the company has reduced the possibility of any major write-offs heading into the new year. In addition, it has also scaled back future growth plans, reduced its headcount and closed several distribution facilities. My point is that most of the bad news has already been factored into the share price. And management's efforts to stop the bleeding will have a positive impact on results going forward. ...