With shares of True Religion (NASDAQ:TRLG) trading at around $26.30 is TRLG an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
If you invested in True Religion when it went public in 2003, then you’re probably a very happy investor at the moment. Since its IPO, True Religion is up over 10,000%. That’s what happens when Jennifer Lopez and Kate Hudson are spotted wearing a new company’s apparel. Even without stars strutting their stuff in sexy and comfortable True Religion clothing, this company would have performed well.
CEO Jeffrey Lubell had experience in textiles, a clear-cut vision, and he’s known to be a great salesman. His expertise are in the area of men’s apparel, but True Religion has been successful with everything from men’s pants to women’s t-shirts. This company has a global presence and what some people refer to as a cult following.
Some of the passion and excitement for True Religion has faded over the past two years due to missteps. Actually, while the stock’s ascent since its IPO has been incredible, the past five years paint a different picture.
Imagine attempting to climb a mountain in the rain while wearing sneakers. Every time you gain some ground, you slip and fall back down to your original starting point. That’s what is has been like for investors of True Religion’s over the past five years.
On the other hand, this stock pays a 3.10% dividend. Being paid to wait has never been a bad investment. Another positive sign is a Forward P/E of 13.07. There is yet another huge selling point, which will be covered below.
E = Debt to Equity Ratio is Strong
True Religion has a debt-to-equity ratio of 0.00. The largest apparel company in the world, V.F. Corporation (NYSE:VFC) has a debt-to-equity ratio of .54. Even more impressive for True Religion is that it has $168.70 million in cash and no debt whereas V.F. Corporation has $304.60 million in cash and $2.57 billion in debt.
T = Technicals on the Stock Chart Are Unexceptional
True Religion has had its fair share of ups and downs over the past few years…