At this crisis point in history - what could possibly create these rare and extraordinary gains?

An Arizona multi-millionaire's revolutionary initiative is 
helping average Americans  find quick and lasting stock market success.

Since the Coronavirus came into our lives this slice of the stock market has given ordinary people the chance to multiply their money by 96% in 21 days on JP Morgan.

Stocks  | July 17, 2020

And then there were two: Gap stock rose more than 8% after it received its second upgrade in a month on Wednesday, this time from RBC Capital Markets.

The bank argues that the apparel retailer can benefit from tailwinds at its Old Navy and Athleta brands, as well as its collaboration with Kanye West. That puts the number of bullish analysts at two, out of more than 20 people who cover the stock.

Analyst Kate Fitzsimons boosted her rating on Gap to Outperform from Sector Perform, and added $5 to her price target, to $18. She acknowledged that the stock has been a laggard in recent years, but said that when investors look past the near-term pressure from the pandemic, there are actually multiple factors that could lift the stock.

First is the company’s fall analyst day. Management is due to give investors an update on how the brands are doing.

Second is the strength at its Old Navy brand, benefiting from its value focus and off-mall locations, and the boost Athleta is seeing from consumers’ focus on athleisure and athletic clothing.

Third is the benefit the company will see when it closes underperforming stores and seeks to renegotiate rents. And fourth, Fitzsimons is also upbeat about the company’s partnership with West: Yeezy Gap.

“Stabilizing the Gap brand is key to stabilizing overall profitability, on top of regaining momentum at Old Navy and Athleta post Covid-19,” she wrote. The flagship banner has seen six straight years of negative same-store sales.

“To that end, Yeezy Gap serves as an interesting catalyst, as cross-over sales between the Yeezy and Gap customer drive traffic, and Gap sees a halo from West's already elevated basics focus.” She estimated that Yeezy Gap could add $2 to $5 per share in enterprise value by 2025.

Fitzsimons’ upgrade comes just about three weeks after Wells Fargo upgraded Gap to Buy, meaning there are two (or three, depending on your source) bullish calls on the stock, out of two dozen analysts who cover it. What is interesting is that Fitzsimons’ is the first to come after the Yeezy Gap deal, which was announced the last week of June.

Consumer companies have been eager to partner with West and his in-laws, although teaming up is certainly not a silver bullet. The question, of course, is how well West’s designs can translate to the mass market, given that the cachet from his past collections has at least in part drawn from their wildly inflated price tags. Yet the collaboration does bring a much needed freshness to the brand, and could draw more customers to the flagging retailer.

A bigger, but less obvious benefit for Gap is the fact that it could see its real-estate obligations drop. As Fitzsimons noted, the company could renegotiate leases if it and mall owner Simon Property Group (SPG) can find a way to play nicely. Moreover, as Barron’s has reported, the pandemic could give Gap cover to do what it should have done long ago: cut back its fleet of stores.

Gap was up 8.7% to $12.13 in morning trading.

A revolutionary initiative is helping average Americans find quick and lasting stock market success.

275% in one week on XLF - an index fund for the financial sector. Even 583%, in 7 days on XHB… an ETF of homebuilding companies in the S&P 500. 

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

You might also like

Stocks | January 28

Stocks | January 28

Investing, Stocks | January 27

Investing | January 27