PSUN - Pacific Sunwear of California

**zhao_xing** Mon Jan 09, 2006 2:21 am

actually, i own PSUN, too. although this stock did not make too much money for me last year. I still decide to keep holding it for next 2-3 years.

I believe this stock (PSUN) still can grow 15-20% at next 3-5 years as its management plans. At current PE=15, that's an attractive price.

**ghg777** Mon Jan 09, 2006 7:38 am

PSUN
Although this stock (PSUN) isn’t in what might be considered value territory according to a lot of metrics, I have to admit it is a good business.

There should be some potential for growth in it. Even though they are expanding the other concept, I’d like to see some share repurchases in the future, if there is any real drop in price. Compared to the market, I think PSUN is a good long term buy now. I’ve noticed a lot of stocks like this one – valued similarly to the market despite above average future prospects. I’m not sure they’re great bargains, but they are certainly better than owning the S&P.

Even when growth slows a bit, I expect to see PSUN's return on capital hold up better than it has at many similarly positioned retailers. Free cash flow generation should remain strong for years to come.

**blast_investor** Mon Jan 09, 2006 11:28 am

The valuation comparison between AEOS and PSUN:

AEOS: PE = 13 PSUN = 15

Return on Asset:
AEOS = 23.13%
PSUN = 17.9%

It looks that AEOS is better stock on both PE and return on asset metrics.

**ghg777** Mon Jan 09, 2006 1:36 pm

PSUN and AEOS
True. But, I have much more faith in PSUN going forward. Being out of step with trends will hit AEOS much harder. PSUN has both branded merchandise and private labels. Also, footwear is a big business at PSUN, and I'd expect shoe sales to be much more consistent than apparel sales (the margins aren't bad either).

I don't have the numbers in front of me, but I believe PSUN also has a larger percentage of male customers than AEOS, although PSUN has more of its sales coming from females than ever before (used to be males accounted for far more sales at PSUN than they do at most teen retailers). Anyway, my point is just that I've always been more impressed with PSUN as a sustainable business.

PSUN has at least one other viable concept for growth. I know nothing of AEOS' (planned) new concept and its prospects, so I can't comment on that. I would, however, be very surprised if AEOS grows earnings faster than PSUN over the next five years. PSUN's comparable sales trends are also more positive than AEOS - but, like I said that's probably just because AEOS is more trend dependent, for better or worse. When it's for the better, AEOS should have wider margins than PSUN, because PSUN carries other people's brands. Anyway, from what I know about both stores and both businesses, I like PSUN's long term prospects much better. But, at current prices, AEOS is certainly not expensive.

**zhao_xing** Mon Jan 09, 2006 5:34 pm

Historically, PSUN had faster and much more stable growth patern than AEOS.

My personal feeling is that AEOS may not grow in the coming years.

but PSUJN can keep its growth rate at 15-20%.