10 Stocks to Consider Before Holiday Hype

BOSTON (TheStreet) -- With the holidays right around the corner, investors can get a jump on the hottest consumer stocks now. The following 10 companies sell trendy products. Their stocks receive top rankings from analysts and are predicted to make big gains in the next 12 months. Below, the stocks are ordered by projected return, from high to highest.

10. Urban Outfitters ( URBN) is a retailer that owns flagship stores as well as Anthropologie, Free People and Terrain. Since 2007, it has increased revenue 17% annually, on average. Fiscal second-quarter profit soared 46% to $72 million, or 42 cents a share, as revenue grew 20%. The operating margin rose from 17% to 19%. Urban has $591 million of cash and no debt. Its stock trades at a forward earnings multiple of 17, a book value multiple of 4.2 and a cash flow multiple of 17, 11%, 46% and 60% premiums to specialty retail industry averages. But, its PEG ratio, a measure of value relative to predicted growth, of 0.7 signals a 30% discount to estimated fair value.

9. Dress Barn ( DBRN) operates a chain of women's apparel specialty stores. During the past three years, it has expanded sales 19% annually, on average. Fiscal fourth-quarter net income surged 59% to $42 million, but earnings per share climbed a more modest 27% to 52 cents, restrained by a higher share count. The operating margin narrowed from 10% to 9%. Dress Barn has $327 million of cash and just $26 million of debt. Its stock sells for a forward earnings multiple of 10 and a book value multiple of 1.9, 33% and 34% discounts to peer averages. Its PEG ratio of 0.4 reflects a 60% discount to fair value. Raymond James ( RJF) expects a gain of 45% to $34.

8. Tempur-Pedic ( TPX) sells premium bedding products worldwide. Its trailing four-quarter sales have grown 23% and its net income has more than doubled. Second-quarter profit surged 99% to $34 million as earnings per share more than doubled to 46 cents, helped by a smaller float. Revenue advanced 42%. The operating margin extended from 16% to 20%. Tempur-Pedic's stock trades at a trailing earnings multiple of 18 and a forward earnings multiple of 13, 74% and 61% discounts to household durables industry averages. Its PEG ratio of 0.2 indicates an 80% discount to fair value. KeyBank ( KEY) forecasts that the stock will advance 34% to $40.

7. Guess ( GES) designs, distributes and licenses apparel and accessories. Since 2007, Guess has boosted revenue 16% annually, on average. Fiscal second-quarter profit expanded 12% to $67 million, or 72 cents a share, as sales climbed 10% to $551 million. The operating margin declined from 14% to 13%. Guess holds $479 million of cash and just $15 million of debt. Guess shares sell for a trailing earnings multiple of 13 and a forward earnings multiple of 12, 20% and 24% discounts to specialty retail peer averages. But, the stock is expensive based on book value and cash flow per share. Credit Suisse ( CS) offers a price target of $60, suggesting a return of 57% in the next 12 months.

6. Activision Blizzard ( ATVI) publishes online, computer, console and handheld games. It was formed through the merger of Activision and Vivendi in 2008. It sells the popular Call of Duty series. Second-quarter profit increased 12% to $219 million, or 17 cents a share, as revenue declined 6.9%. The operating margin rose from 23% to 31%. Activision has $2.8 billion of cash and no debt. Its stock trades at a forward earnings multiple of 14, a book value multiple of 1.2 and a cash flow multiple of 12, 49%, 77% and 41% discounts to software peer averages. Its PEG ratio of 0.1 demonstrates a 90% discount to fair value. RBC ( RY) offers a target of $16.

5. Summer Infant ( SUMR) sells children's health, safety and wellness products. During the past three years, Summer Infant has grown sales 95% annually, on average. Second-quarter net income advanced 33% to $2.2 million. Earnings per share climbed 18% to 13 cents. Revenue stretched 29% to $49 million. The operating margin tightened from 7.4% to 7%. Summer Infant holds $2.7 million of cash and $42 million of debt, translating to a debt-to-equity ratio of 0.6. Its stock sells for a forward earnings multiple of 12 and a book value multiple of 1.6, 36% and 59% discounts to industry averages. Its PEG ratio of 0.4 reflects a 60% discount to estimated fair value.

4. Crocs ( CROX) makes casual and athletic footwear. Since 2007, it has boosted sales 6.2% a year as net income dropped 25% a year. Crocs swung to a second-quarter profit of $32 million, or 37 cents a share, from a loss of $30 million, or 36 cents, a year earlier. Revenue gained 15%. The operating margin climbed from 6% to 17%. Crocs has $97 million of cash, equal to a quick ratio of 1.6, and just $3 million of debt. Its stock trades at a forward earnings multiple of 14, a book value multiple of 3.1 and a sales multiple of 1.4, 22%, 19% and 26% discounts to textile and apparel industry averages. Piper Jaffray ( PJC) values the stock at $17, suggesting a 44% return.

3. Talbots ( TLB) is a specialty retailer and direct marketer of women's apparel, accessories and shoes. Talbots swung to a fiscal second-quarter profit of $940,000, or 1 cent per share, from a loss of $24 million, or 38 cents, a year earlier. Revenue declined 1.3% to $301 million. The operating margin climbed from negative territory to positive 4%. Talbots holds $4.7 million of cash and $37 million of debt, translating to a debt-to-equity ratio of 0.2. Its stock sells for a forward earnings multiple of 11, a 28% discount to its peer average. The shares are expensive based on book value and cash flow. Lazard Capital Markets forecasts that the stock will gain 77% to $21.

2. Shoe Carnival ( SCVL) is a footwear retailer with stores in the Midwest, South and Southeast. Fiscal second-quarter profit more than quadrupled to $4.1 million, or 32 cents a share, as revenue advanced 8.2% to $165 million. The operating margin widened from 1.3% to 3.6%. Shoe Carnival has $41 million of cash, converting to a quick ratio of 0.5, and no debt. Its stock trades at a forward earnings multiple of 9.1, a book value multiple of 1.1 and a cash flow multiple of 7.9, 41%, 63%, and 26% discounts to specialty retail industry averages. Its PEG ratio of 0.2 indicates an 80% discount to fair value. Sidoti & Co. offers a price target of $39, implying 96% of upside.

1. True Religion Apparel ( TRLG) sells high-fashion jeans and apparel through its flagship brand and its subsidiary, Guru Denim. The products are sold at upscale retailers and boutiques. Second-quarter profit decreased 31% to $7.5 million, or 30 cents a share, as revenue stretched 14% to $82 million. The operating margin contracted from 25% to 20%. True Religion holds $123 million of cash, equaling a lofty quick ratio of 6.2, and no debt. True Religion's stock sells for a forward earnings multiple of 8.5, a book value multiple of 2.4 and a cash flow multiple of 8.3, 52%, 38% and 44% discounts to peer averages. Caris & Co. predicts a 90% rise to $40.

-- Written by Jake Lynch in Boston.

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