#1 – Zale Corp.
Recommended by: Hilary Kramer, Editor, Breakout Stocks Under $5
Zale Corp. (NYSE: ZLC) had a great run in November and December, jumping to $5 last week. Since then, however, the stock has pulled back to $4. There hasn’t been any specific news to drive the stock down, but the company will announce its much-anticipated sales for November and December on Tuesday, and the Street apparently has its concerns.
However, jewelry was back in vogue this past holiday season and Zale was positioned nicely to take advantage of the consumer’s rejuvenated zeal for glittery and expensive presents. That’s why the stock ran up. Now, some investors are concerned that a respectable holiday season won’t be good enough to maintain the momentum as the company tries to return to profitability. Adding to the concern is the impact of the post-Christmas blizzard that hit us hard here in New York and along the East Coast — and put a big dent in after-holiday spending.
But if the company kept pace with overall jewelry sales gains during holidays, it could well lead to a positive earnings surprise. This isn’t a given, of course, but I still like the direction the company is heading, even with some of the air coming out of the stock in recent days. Buy ZLC on dips under $3.75.