EDGE TRADER

Sunday, August 21, 2005

PSUN




Pacific Sunwear. A very interesting Chart! Not because of the candlesticks, but because of the clear daily volatility. This stock has the potential to be "gamed" if played carefully with tight stops and never held overnight. I am definitely interested in it from this aspect if no other.

Website indicates locations in all 50 states, so the expansion potential seems minimal. They delivered a good upside surprise in the most recent quarter, but fell with other retailers over concerns regarding spending.

Not a stock that seems to be the best of its category, but this may be a good location for a trend trade.

Notes from conference call: PSUN is opening a new chain called 1000 steps to sell footwear to an older mix of clientele. Projections are for 600-800 locations, but the 1st 8-10 stores are not to open until 2006. Comp store numbers in the 3's, but expanded profits and margins. The new store sounds like an entry to compete against Skechers. Don't know if this will be successful. Pac Sun is capitalized well, and can afford to start a new enterprise like this. Clearly they've chosen to start from scratch rather than acquire.

I will add this one to my watchlist.

1 Comments:

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