ANF - I Just Shorted Abercrombie & Fitch Stock After Rising 1430% Since The Pandemic And Is Now Overpriced

2024-05-21 15:31:25 ET

Summary

• Abercrombie & Fitch stock hit a 52-week high of $146.31 on May 20 and is up 1,430% since March 2020.
• Investors are pricing the stock, expecting interest rates to drop.
• The stock price is too high because I am expecting interest rates to remain higher for much longer.
• This has been a risky momentum trade lately.

Fashion retailer Abercrombie & Fitch Co. ( ANF ) stock price has risen 1,430% since its low at the start of the pandemic in March 2020, but it is now overpriced trading with a P/E of 23.3x based on latest reported annual earnings, especially since management has guided for only a 4-6% sales increase this year. A major reason why I think ANF stock price is too high, is that investors are pricing in lower interest rates. I think rates will remain higher for much longer than the market is currently expecting. Using higher rates in stock pricing models results in significantly lower values for ANF....

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