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Ticker Shock: Three Reasons to Not Try on AnnTaylor

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Friday's top stories and stocks with potential to move.

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It's been a crazy morning already. My computer froze three times and I had to reboot each time. It's still too early in the morning for a drink, right? It's Friday, does that make any difference?

Although China was up the Hang Seng and the Nikkei were down 0.64% and 1.4% respectively. Meanwhile, European stocks were showing me some green earlier this morning. And here in the US we are currently trading...

So here's what I'm seeing this fine Friday morning:

AnnTaylor (ANN)
Excluding items AnnTaylor put up $0.06 in the second quarter, and that was a hefty 3 cents better than expectations. But in spite of that I am not trying these guys on for size.

1. Yeah I'll be the first to concede that AnnTaylor enjoys a great reputation among the fairer sex, and I think it certainly could roar when the economy comes back full force, but its expected to lose a bunch of money this year and earn just $0.20 next year, which in my mind isn't too swell for a stock that trades north of $12.

2. At the end of the ol' day I think there are better plays in the retail space right now. Again, I remain a bull on the discounters, because I think there's more near-term upside potential to be had there.

3. What's going to take this stock to the next level? What's the next big catalyst I should be on the lookout for? Let me know because I can't tell you, which is why I'm sitting this one out.

Gap, Inc (GPS)
I don't know about you, but I saw a few good tidbits in the retailer's second quarter release.

The first and the most obvious is that it put up $0.33 in the period, which was a pretty penny better than expected. It also beat on the top line too. To boot its gross and operating margins rose.

Some thoughts:

1. Its comp store sales numbers left a little to be desired but overall I thought it was a good quarter. And I continue to believe that a new 52-week high isn't too far down the pike.

2. Hey, nobody is really talking about it this morning but I found this line in the release very interesting: "The company announced that it will likely resume share repurchases in the third quarter of fiscal year 2009." Pretty neat with the stock kinda near its high, right? Me thinks it's a good sign.

For my previous take on Gap click here.
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No positions in stocks mentioned.

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