Tuesday, March 2, 2010

Which is Your "True Religion"?


My true religion is definitely Catholicism!  But today, I'm not talking about religion at all!  I'm talking about fashion.  As you may or may not know, True Religion (ticker: TRLG) jeans are all the rage in LA (and the entire US for that matter) these days.  They are high-end jeans that I would probably never own, but people are willing to fork over $150+ for one of them.  In Canada, you can only buy True Religion products from specialty stores that import them.  As a result of this anecdote, there's not too much exposure to the international general public, and this makes it a gem!

As my wife, Renee, will attest, I have very little fashion sense.  But I do know a good stock when I see one.  It is a small cap stock at currently $650 million market cap.  It has no debt, a trailing PE of 13.5, PEG of 0.39 (!!), and growth is estimated to be 31% over the next 5 years.  If the above acronyms have no meaning to you whatsoever, please read my fundamental analysis posts here and here.  In short, this stock looks a little undervalued for its growth potential.  As well, it had an amazing quarter in Q4 of last year and the stock jumped about 30% in the past week.  I'm watching for a pullback and will potentially stock up (no pun intended).

If True Religion becomes the next Diesel, and they are expanding into international markets (Toronto, London and Tokyo), you could see its market cap grow by many fold.  So, whip out your calculators and check this stock out.  I know I'm getting my Excel spreadsheets ready!

Update (2010-03-03): One huge point I forgot to mention is the ethical aspects of investing in True Religion.  I did some googling and found that True Religion does NOT use sweatshops!  Alleluia!