6. Pacific Sunwear
Year-to-date Total Return (as of Dec. 12): 97.48%
Price-to-earnings ratio: N/A
Market Cap: $215 million
Shares of Pacific Sunwear of California (PSUN) popped on Dec. 6 after the action sports retailer reported an in-line earnings loss, yet was encouraged by better-than-expected sales, as well as a 6% sales comp for November.
For the fourth-quarter, the Anaheim, Calif.-based business predicts a 17-cent to 12-cent loss, missing consensus by a penny, and comparable-store sales from 1% to 5%.
Yet Pacific Sunwear seems to be a bright spot in the fledgling teen retailer space, where Aeropostale (ARO), Abercrombie & Fitch (ANF) and American Eagle Outfitters (AEO) are struggling to keep teens interested in their wares.
Pacific Sunwear has been shuttering underperforming stores while improving its merchandise shift by adding private-label and exclusive lines in order to improve performance.
Analysts have been encouraged by the changes. "We think Pacific Sunwear of California Inc.'s multi-year efforts to introduce trendy brands are reaching critical mass," wrote Edward Yruma, an analyst at KeyBanc Capital Markets.
Despite the company's third-quarter loss, Yruma rates Pac Sun shares "hold," saying its valuation is "reasonable" at 0.3x 2014 enterprise value/sales vs. 0.5x the teen retail group "for a patient investor with high risk tolerance."
"We continue to believe that PSUN has the potential to become a key player in the teen mall retail space, again, given the strength of its management team," Yruma noted. "That said, we continue to look for more consistent trends before adopting a more constructive stance."