Francescas Holdings (FRAN) is at the top of my radar for stocks to buy. Each day I sit at the screen, waiting for a good opportunity to get in. But this stock just doesn’t have enough going for it to push me over the edge.
One Year Chart
Francesca’s holdings is a new growth stock. If you’re interested in the company, check out my previous article on FRAN. Today’s article is about the stock.
This is one of the fastest growing retailers around. Its a growth stock I need to own. The problem is this is a new retail stock, and those can disappoint. So I can’t pay too much for this stock, I could get burned.
FRAN needs to increase Annual Profit Estimates more. With a P/E of 35 FRAN will have to increase annual estimates to get your stock to go higher (I think).
I looked back at 2011 profits. Around mid-year the company was expected to make $0.54. Three months later that number was still $0.54. In the end it made $0.58. That’s not a whole lot more than expectations. So I don’t get a feeling FRAn will pop after earnings come out.
Fair Value
I have to think this stock is worth 35 times earnings. We’re in a market correction right now, and stocks should be coming down to “buyable levels” but I don’t see this stock as being on sale. FRAN just won’t fall enough to make the stock a good buy. I think 30 times earnings would be nice, but that’s $24. The stock is getting a lot of support here at $28 and it doesn’t look like it’ll go any lower.
Sharek’s Take
Francescas Holdings is one of my favorite stocks. Numbers are good, but we need to see 2012 estimates climb for the stock to break out. Since estimates aren’t really increasing, I want to get it on sale because I’m afraid of buying up here.
I want to buy FRAN, it just doesn’t give me a reason too.
