2024-05-31 12:48:49 ET
Summary
- The Gap, Inc. stock has risen 70% from the author's buy call in the past 6 months, indicating a successful turnaround and brand revival.
- Comparable sales for all four brands in the Gap portfolio have shown positive growth, with online sales increasing by 5% compared to last year.
- The company's margins have been outstanding, with gross margin increasing by 390 basis points and merchandise margin soaring by 460 basis points.
- We see more upside on a beat and raise quarter with still reasonable valuation.
In November 2023, we issued a buy call on The Gap, Inc. ( GPS ) stock, telling you it was back from the brink and the shares would head higher. Here we are about 6 months later and the stock is up 70%. We think the stock is heading higher still. The turnaround is unfolding, and the brand is being revived. This is evidenced by its just-reported Q1 earnings . This is a stock we have traded both long and short in our investing group, though we had not had a position since closing out a short at $8 back in May 2023 of this year. The follow-through in shares since our buy has been impressive. We think you can ride the specialty retail stock higher on this momentum for added gains....
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The Gap Dazzles, We See It Heading Higher