Wet Seal Turns It Around

Shares of Wet Seal (WTSLA Quote) haven't found a foothold since the stock climbed over $6 last summer, even though the mall-based teen-apparel chain has continuously posted mammoth monthly sales-growth figures.

Its monthly comps, a key retail metric gauging sales at stores open at least a year, have shown year-over-year gains in the 30% to 60% range. Such success reflects the fruits of a massive turnaround orchestrated under merchandising guru Michael Gold, a part-time consultant to the retailer. Despite the numbers, comparisons will get tough in 2006, and the shares have been locked in a trading range.

In the past few days, Wet Seal shares have dropped more than 3% since the retailer announced that its bid for bankrupt clothing retailer G&G Retail came up short. Investors, having expected the company to scoop up G&G at bargain-basement prices, came away disappointed. But with the stock trading lower, some analysts are unfazed, viewing the selloff as an opportunity to buy one of the last real growth stocks in specialty retailing's sweet spot. ...