Urban Outfitters Stocks Hidden Value

This article originally appeared on Jan 29, 2014 on RealMoney.com. To read more content like this plus see inside Jim Cramer's multimillion-dollar portfolio for FREE... Click Here NOW.

Market confidence that the economy was coming back has had a mixed effect on shares of fashion retailers. To be sure, the beneficiaries have been the fashion-focused department stores such as Nordstrom  (JWN), Macy's (M), and Michael Kors  (KORS), or those that are less exposed to a financially sensitive consumer.

On the opposite extreme, you have mass-merchant retailers, including JCPenney  (JCP) and Sears  (SHLD), that are struggling amid titans such as Wal-Mart  (WMT) and Target  (TGT).

Tucked in the middle are fashion labels that are experiencing a cyclical adjustment. One-time darlings such as Aeropostale (AERO) and Abercrombie and Fitch  (ANF) are trading at lows trying to reinvent themselves. And some investors have started to look closer at these names as they appear to be trading at very low multiples to future free cash flow.

One name that deserves a close look is Urban Outfitters  (URBN), a $5.2 billion operator of retail fashion brands. It's the brands that URBN owns and operates that really make this company an intriguing retailing opportunity. Urban Outfitter operates five distinct brands: Urban Outfitters, Anthropologie, Free People, Terrian, and BHLDN.

The company operates 229 Urban Outfitters stores that offer eclectic fashion inspired by a contemporary love for art, music, and fashion. Focusing on 18 year olds and above, these stores sell men's and women's apparel as well as unique items for the modern home or apartment. Anthropologie is collection of 188 retail stores worldwide that offer a unique array of fashions from the world over that are designed for the fashion conscious women.

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