How Thanksgiving Is Treating American Eagle Outfitters, Abercrombie & Fitch Co.

Retail rivals American Eagle Outfitters and Abercrombie & Fitch. Co. have had different Thanksgiving weeks

by Alex Eppstein

Published on Nov 28, 2014 at 9:29 AM
Updated on Apr 20, 2015 at 5:32 PM

Over the weekend, Schaeffer's Senior Quantitative Analyst Rocky White took a look at some stocks that tend to outperform during the week of Thanksgiving. With Christmas (read: gift-giving) just around the corner, it was no surprise to see a number of retailers among the 20 stocks that have historically fared well this time of year. The two we'll take a look at today are teen apparel rivals American Eagle Outfitters (NYSE:AEO) and Abercrombie & Fitch Co. (NYSE:ANF).

Diving right in, AEO has indeed performed admirably this week, advancing 1.8% as of Wednesday's close at $13.92. Longer term, however, the shares have struggled, down 3.3% year-to-date. In recent weeks, in fact, the equity has encountered resistance at its descending 80-week moving average, currently lodged at $14.18.

As such, pessimism is on the rise throughout the Street. For one, short interest rose 24.4% during the two most recent period periods, and now represents 18.4% of AEO's float -- which would take nearly a week to cover, at the stock's typical trading volume. What's more, 75% of covering analysts rate the shares a "hold" or worse, and the consensus 12-month price target of $13.86 sits below AEO's current perch.

It's a similar set-up for ANF -- though this stock has had a surprisingly harsh Thanksgiving week, down 1.1% to trade at $29.12. This only adds to the equity's longer-term technical struggles, as the shares have dropped 11.5% since the calendar year began.

The Street has taken note of this downward trend, as well. About 30% of ANF's float is sold short, which would take more than a week to buy back, at the stock's average daily pace of trading. What's more, bearish betting has picked up at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where ANF's 10-day put/call volume ratio checks in at 2.00. Not only does this reading signal puts have been bought to open at twice the rate of calls over the last two weeks, but it also ranks in the 83rd percentile of its annual range.

Looking ahead, American Eagle Outfitters (NYSE:AEO) and Abercrombie & Fitch Co. (NYSE:ANF) are scheduled to step into the earnings confessional next Thursday evening and next Wednesday morning, respectively. AEO has tumbled in the wake of its past four turns under the spotlight, averaging a single-session post-earnings loss of 8.4%. The opposite is true of ANF, which has averaged a 3.1% gain in the session following its last four trips to the confessional.

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