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No. of Recommendations: 16
Longtime Barron's Roundtable Scott Black is buying American Eagle Outfitters, according to the Oct. 10 issue of Barron's. The Warrendale, PA-based retailer to 15-to-25 year olds sports a forward P/E ratio of just 11x.

If you read my BSAS presentation, recall that American Eagle has been situated in the Earnings Power Chart's upper-right box every year for the last 5 years. In addition, Chairman Jay Schottenstein just bought 1 million shares at $21 to add to his family's existing 5.8 million share count, according to the Wall Street Journal. Another director bought 40,000 shares at $21.

American Eagle's debt repayment period is 1x for the latest fiscal year, based on net debt & equivalents (includes capitalized leases) of $262 million and defensive profits (free cash flow) of $263 million. The debt repayment period is the period of time, in years, that it will take a company to pay off all of its debt and debt-equivalents. The lower a firm's debt repayment period, the lower your risk of buying a company that goes bankrupt for financial reasons.

The 3-year return on greenest dollar is 27%. Sssswheat.

I like American Eagle's combination of high-quality growth, clean balance sheet, and low earnings multiple. In the past, this formula has produced market-beating results for yours truly.


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