If you’re looking to ride a fashionable momentum trade higher, then why not do it urban style?
More specifically, do it with fashion retailer Urban Outfitters (NASDAQ:URBN), a stock that’s been on a tear of late, with a bullish cup-with-handle technical pattern that could be good for another 10%-15% upside during the next several months.
The chart of URBN shows the breakout from a base that formed from mid-September to the end of the year. In January, shares spiked, breaking out of a base and surging to new all-time highs. The stock has been good to traders of late, and during the past month shareholders in Urban Outfitters have seen their stock rise nearly 12%. During the past year, URBN shares are up more than 55%, but that could be just the beginning of the upside if the company continues to see strong sales.
Recently, Urban Outfitters posted healthy numbers for the holiday season, with the company reporting that net sales for the last two months of 2012 had jumped 15% year over year to a rollicking $666 million. Comparable retail segment sales were up 9% across all brands, but it was the comp sales growth in the company’s Free People brand of 33% that stood out, and that helped Urban Outfitters stay fashionable among momentum traders.
If sales can continue to come in strong, then URBN shares have the potential to deliver traders another 10%-15% upside from current levels during the next two to three months. Of course, keep in mind that fashion is ever-so fickle, and that means any hint of a slowdown could send traders running for the proverbial exits. That’s why whenever taking any trading position; it’s smart to make sure you place a stop-loss order in along with your buy order somewhere between 8%-10% below your estimated fill price.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.