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4 Reasons to buy Wet Seal Inc

By Jorge Aura

According the company, The Wet Seal, Inc (Nasdaq: WTSL) is a multi-channel specialty retailer. It operates stores that sell fashionable and contemporary apparel and accessory items for female consumers. It operates in two segments, Wet Seal and Arden B. The Wet Seal segment offers fashion apparel and accessories for girls through its Wet Seal stores. The Arden B segment provides contemporary fashion apparel, dresses, sportswear separates, and accessories for the contemporary woman through its Arden B stores. The company also operates in web stores under the wetseal.com and ardenb.com names. As of May 27, 2014, it operated 532 stores in 47 states and Puerto Rico. The Wet Seal, Inc. was founded in 1962.

I find at least four reasons to buy the stock currently:

1.  Historical Revenues vs Historical Quote

WTSL Revenue (TTM) Chart

WTSL Chart
WTSL data by YCharts

Historically with lower sales than at present, the company has had a value per shares much higher.
On July 9, 2013 Wet Seal closed in $5,04 per share. If we see the below chart, the company last year had a higher loss compared to this year.

WTSL Net Income (TTM) Chart

2. The chart mark bounce

MACD is in the time of an onset bullish indication.

3. Analysts' price target: $4
  • On October 11, 2013, Dougherty & Company marks in Wet Seal Inc with a Buy. PT $5.00.
Wet Seal Inc: Analyst stock recommendations
(Source)


4. Insiders are buying 165,120 shares in 2014
The following is a summary of the latest transactions:
  • On April 14, 2014, the director of the company Adam Rothstein bought 20,000 shares at an average price of $1,12.
  • On April 2, 2014, the EVP, store and operations Lesli Gilbert bought 10,000 shares at an average price of $1,36.
Conclusion

Wet Seal Inc is a unique opportunity in the market. The company is undervalued. The insiders buying shows a higher confidence in the company.
*Chart data sourced from stockcharts, all other data sourced from Nasdaq.com as well as the web of the previously mentioned company and yahoo finance.

Disclosure: I am long WTSL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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1 comments:

I like this. Really interesting. So, I'll check more of your articles later. Have a nice day!