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) -- Specialty retail is a tricky industry. Companies with long-term "buy" ratings are few and far between because fashion trends are ephemeral.

I've been an advocate of denim-retailer

The Buckle

(BKE) - Get Report

for about a year. The company has achieved superlative growth, boosting quarterly same-store sales for 10 consecutive periods despite the economic recession. A 12-month growth rate of 21% for sales and 25% for earnings spells counter recessionary. Few, if any, can match that record.

Alas, consistent operating success doesn't translate into predictable stock performance. The shares have been whipsawed this year, surging 90% between my last positive article on Jan. 15 and May 4. The May 4 top was at $38.47. Today, you can pick up shares for $27 and change, 30% below the May peak and 40% less than the 52-week high. At a trailing price-to-earnings ratio of 11, the stock is 47% cheaper than its peer group.

If you sold in May and went away, our January "buy" recommendation was extremely lucrative. If not, you're still up 35% from cost, outpacing the

Dow Jones Industrial Average


S&P 500 Index

over the same period. Investors sifting through specialty retailers who are tired of hearing about "hold"-rated


(ANF) - Get Report


American Eagle

(AEO) - Get Report

should investigate The Buckle, a Street.com Ratings favorite.

Second-quarter net income rose 12% to $25 million, or 54 cents a share, as revenue grew 14% to $193 million. Its gross margin declined from 45% to 43%, but its operating margin widened from 18% to 20%. The balance sheet is prodigious, with $163 million of cash, equating to a quick ratio of 2.1, and zero debt. We give The Buckle a financial strength score of 8.9 out of 10, higher than the "buy"-list average of 7.1.

August comparable-store sales, released last week, disappointed analysts. A 3.6% uptick is respectable, but below trend for the fast-growth denim dealer. July comparable-store sales hit 2.8%, prompting a 15% drop in the stock. Despite evidence that growth is petering, we remain optimistic about long-term prospects and expect the shares to outperform for the remainder of 2009.

A crucial metric that isn't captured in monthly sales releases is online performance, which has been showing remarkable strength. Second-quarter online sales advanced 39%. For the first half of 2009, online sales surged 56%. Investors selling on weak comps are underestimating e-commerce growth, which could bolster margins because of the low cost of expansion.

The physical expansion strategy has been beefed up as well. Vacancies in the Northeast catalyzed a critical move into that region. With plans to open 21 new stores for fiscal 2010, there's no evidence that The Buckle is yielding to retail trends. A dividend yield of 3% is another comparative strength, higher than that of

The Gap

(GPS) - Get Report


J. Crew





, to name just a few.

-- Reported by Jake Lynch in Boston.

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