"If you've visited a mall, or bought clothing for toddlers, you might already be familiar with our latest 'Undiscovered Gem' -- Children's Place Retail Stores (NASDAQ: PLCE)," says Elizabeth Harrow.
In Schaeffer's Investment Research, the technically-oriented contrarian explains, "The stock is on the ascent, but Wall Street isn't taking much notice."
"The company was founded in 1969, and is based out of Seacaucus, New Jersey. The retailing chain boasts a market cap of just under $1 billion. It is is a member of the S&P SmallCap 600 Index, as well as the S&P SuperComp 1500, which lends the shares a bit of Street cred.
"The firm recently pleasantly surprised investors with its same-store sales figures. During May, sales at stores open for at least 1 year rose by 10%, compared to analysts' expectations for a gain of 4.3%. Total sales for the month galloped 19% higher for the 4-week period ended May 31.
"The stock has surged 31% year-to-date, and its performance is putting the broader S&P 500 to shame. PLCE boasts a 60-day relative-strength reading of 162%, indicating that it has outperformed the SPX by 62 percentage points during the past 60 trading days.
"Since January, the shares have stair-stepped their way higher, and are now firmly entrenched in the beginnings of an uptrend. Support has emerged from the stock's 10-day and 20-day moving averages.
"Meanwhile, Wall Street is still in the dark about the stock's newfound strength. Starting with the analyst community, Zacks reports that only 5 analysts have offered up an official opinion on the shares.
"Of those, just 2 brokerage firms are bullish on the shares, with the rest issuing skeptical 'hold' or 'sell' recommendations. This leaves the door open for upgrades or new initiations, either of which could spark a wave of interest in the stock among investors.
"Plus, option traders have yet to pile onto PLCE's bandwagon, leaving ample opportunity for more speculative investors to discover the shares. Even more compelling, those traders who are playing PLCE options have taken up a bearish stance.If the stock continues to gain, we could see an unwinding of this skepticism.
"One group that has flocked to PLCE are short sellers. The buying pressure that results from short covering should continue to benefit the equity; a healthy 18.6% of its float remains dedicated to short interest.
"Overall, PLCE seems well-positioned to benefit from fresh investor attention, as well as an unwinding of negative sentiment. If the equity can extend its recent rally, the bearish faction may be forced to admit defeat sooner rather than later.
"Technically, the 35 level had been a sticking point. A series of weekly closings atop this critical region could indicate that PLCE's uptrend has some serious legs."
