True Religion: Just a Name?
by: Brandon Jentzen
Designer brands have long been a significant part of our economy. A recent company that has emerged and proven to be performing well is True Religion (TRLG). They have entered into a niche market that can be highly profitable, if able survive. So far, they have been focusing on producing designer jeans and some other garments such as shirts and sweatshirts. It seems as though you cannot walk anywhere without seeing their tremendously established horseshoe stitch. The price of these jeans defiantly remind you that you are purchasing designer jeans and not just any ordinary denim. Thus far, their jeans have acted like that of a Giffen good in that more and more jeans have been purchased despite high prices.
Year to date, the company has been up around 18.4%, which is great in the current economic environment. The P/E ratio is defiantly on the higher end, signaling that many investors have high hopes for the company in the future and are willing to pay a premium for their earnings.Their forward P/E ratio is much less than the industry's, all awhile their growth is only slightly lower indicating a good buy. With sales growth estimates as well as earnings estimates being extremely high, this defiantly is a long position in my portfolio.
On top of the great growth outlooks for the company, they have a solid balance sheet. Their current ratio and acid-test ratios are phenomenal. Being unleveraged, they look great as far as solvency is concerned. Overall, this an exploding company with sky-high potential, and a great buy for a long position.
Only in America could that headline be about a jeans company and not about the faith of our citizens...