Far from the double-digits they used to trade for 5 years ago, the penny stock of American Apparel Inc. (NYSE MKT: APP) got a boost from Roth Capital on Thursday. Coverage on APP stock was initiated by the wall street analysts and issued a “buy” rating after the Company announced double-digit growth across the board for the month of May compared to the same month last year. Shares of APP traded between 0.83 and 0.88 on Thursday on volume of 509,834 before closing at 0.85.
American Apparel Inc, a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel, reaffirmed their 2012 EBITDA guidance of $32 to $40 million. Since our December 15th penny stock alert on APP, share prices have risen from 0.53 to as high as $1.21, a gain of 128.30%, and is currently still up 60.38% since our alert.
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APP Stock Chart
Market Cap: 90.02M
Price/Sales (ttm): 0.16
Price/Book (mrq): 2.12
Avg Vol (3 month): 468,395
Avg Vol (10 day): 160,450
Shares Outstanding: 105.91M
% Held by Insiders: 69.15%
% Held by Institutions: 8.50%
This year has proven thus far to be a banner recovery year for American Apparel. For the past 5 months, January to May, the Company has reported estimated increases in the double-digits when compared to the corresponding months of 2011. (see here) Thus far, the estimated monthly increases per revenue generator, for the 5 months of January to May, have been:
Comparable Store Sales: 11%, 11%, 20%, 6% and 17%
Comparable Online Sales: 41%, 9%, 24%, 50% and 19%
Comparable Store & Online: 15%, 11%, 21%, 10% and 17%
Wholesale Net Sales: 23%, 21%, 9%, 4% and 24%
About APP Stock
American Apparel, Inc., and its subsidiaries, is a vertically-integrated manufacturer, distributor, and retailer of branded fashion basic apparel products and designs, manufactures and sells clothing and accessories for women, men, children and babies. The Company sells its products through the wholesale distribution channel supplying t-shirts and other casual wear to distributors and screen printers, as well as direct to customers through its retail stores located in the U. S. and internationally.
In addition, American Apparel operates an online retail e-commerce website. As of March 31, 2012, the Company operated a total of 249 retail stores in the United States, Canada and 18 other countries.
Bottom Line: The penny stock of the controversial advertising apparel Company is having a knock-out 2012 after nearly having to liquidate assets in 2010 and 2011 due to hemorrhaging losses. Although they are from from being break-even, the noticeable reduction in Cost of Sales paired with the increased revenues shines some light on its ability to continue for the foreseeable short term without having to massively dilute APP stock to raise capital.
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