Bargains shoppers looking for long positions that could double in the next 12 moths should pay some close attention to the Nasdaq listed penny stock of Wet Seal Inc. (WTSL). After setting a new 52Wk low yesterday, the lowest WTSL stock has been in more than 3 years, shareholders rushed to sell their shares for a second session in the young women’s apparel retailer due to worse than forecast Q4, 2013 sales and a dim projection for Q1, 2014. Albeit that a change in management has had but one year to right the ship, predicting what a girl wants over these next 12 months could spell triple digit gains for those who know how to live on Venus.
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WTSL Stock Quote
Market Cap: 105.54M
Last: 1.26 ▼ -0.29 (-18.71%)
Volume: 4,650,253
52Wk High: 5.20
52Wk Low: 1.25
Authorized: 300,000,000
Issued and Outstanding: 84,722,419
14-Day Rel Strength: 22.41%
1st Resistance Point: 1.44
1st Support Level: 1.16
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Wet Seal has been a brand teenage girls and women in their 30’s have been shopping at in malls across the U.S. for over 20 years now. However, with the internet shopping booming to levels which are making these mall stores virtually obsolete, one of the keys to reclaiming the fame and fortune experienced prior to their former CEO’s misdirection is already being addressed by current CEO, John Goodman.
From 2009 to 2011, Wet Seal was growing revenues from $560.9 million in 2009 to $620.1 million in 2011, an increase of almost $60 million while the economy was going into the tank. In January, 2011, Susan P. McGalla was appointed the CEO position at Wet Seal and attempted to cater to audiences which had no business being catered to and alienating their core customer base. McGalla got a phone call on July 23, 2012 from the board of directors giving her the boot but the damage had already been done.
The Wet Seal ship already looks like its headed into the right direction again as witnessed in the most recent $27 million financing deal. The Clinton Group, Inc., in a letter issued on behalf of itself and its affiliates commended the Wet Seal Board and management team for taking the right steps in a very difficult macro environment for apparel retailers focused on teen clothing. They also noted that results have been weak among Wet Seal and their subsidiaries’ mall-based peers and that many competitors are attempting to move into the “fast-fashion” business, an area where Wet Seal has long operated.
The kudos from a multi-million dollar financing group did very little to halt the mass exodus of WTSL shareholders with Friday and Monday having been liquidation sales in excess of 4,600,000 shares for the most part. Although Q2 doesn’t look like it is due to be much better than Q1 was, patient investors with a knack for holding long positions could be looking at paying capital gains taxes in 2015 on shares of WTSL purchased at these record lows.
Shares of WTSL stock are down -75.77% from their June 3, 2013 high of $5.20 which, a return to that level, could be worth over 300% should it bounce back. We saw this before with the surfer apparel retailer Quiksilver Inc. (ZQK) when it’s shares hit new lows back in 2012 only to bounce back strong from $2.09 to $9.29 in November, 2013.
ZQK stock closed at $7.99 on Monday, up 282% from those lows in 2012. Is WTSL stock due to for the long, drawn out bounce we think it’s due for?
About WTSL Stock
Wet Seal Inc. is a national specialty retailer operating two nationwide, primarily mall-based, chains of retail stores under the names “Wet Seal” and “Arden B.” selling fashionable and contemporary apparel and accessory items designed for female customers aged 13 to 39 years old.
Click here to view the SEC filings for WTSL.
Click here to view the website for Wet Seal.
Last 5 Trading Sessions:
| Date | Open | High | Low | Last | Change | % Change | Volume |
| 03/24/14 | 1.52 | 1.53 | 1.25 | 1.26 | -0.29 | -18.71% | 4,677,000 |
| 03/21/14 | 1.71 | 1.73 | 1.43 | 1.55 | -0.20 | -11.43% | 5,435,100 |
| 03/20/14 | 1.68 | 1.75 | 1.65 | 1.75 | +0.10 | +6.06% | 980,700 |
| 03/19/14 | 1.72 | 1.73 | 1.63 | 1.65 | -0.05 | -2.94% | 743,400 |
| 03/18/14 | 1.84 | 1.84 | 1.68 | 1.70 | -0.13 | -7.10% | 1,057,900 |
Bottom Line:
We love it when Nasdaq listed penny stocks like WTSL hit record lows but have a positive future ahead of them. Keep WTSL stock on watch for the sell off to end which should happen some time this week before going in strong and prepare to sit on it like an egg until the $2’s hatch.
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