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In a recent note, Jefferies gives reasons why investors should own American Eagle Outfitters
AEO. It recently upgraded AEO on 6/11/2010 and with the stock up 18% since then continues to see meaningful upside.
AEO showed with Q2 results that it is serious about removing excess costs and improving profit margins in the organization. Also, inventories are staying low to drive margin stability in 2H, there is a quantifying cost cutting program, stock buybacks will likely accelerate further, and potential special dividend or more dividend increases could be on the table.
Most importantly, the market still hates AEO and thats why Jefferies likes it. The stock continues to underperform the group overall year-to-date. Jefferies believes this provides an attractive entry point for AEO shares.
AEO closed yesterday at $14.96
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