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clothing brands - make money in stock investing in brands yes or no?



Stock Management Value Overall Rating-Date Of Article clothing brands
CHKE 6 out of 10 6 out of 10 6 out of 10
TRLG 7 out of 10 7 out of 10 7 out of 10

5/25/2009

Will Cherokee die or thrive in the future of small cap clothing brands. They appear to pay a huge dividend or at least they have been for awhile. They pay most their earning in dividends which is a bit scary and unnecessary in my opinion. They should be saving more of their money for the future because they may potentially need it to buy other brands out; they have already stated they may start buying other companies at which time they will not pay as much of a dividend or a dividend at all in my opinion. This is why I think that it is important for companies to save at least some of their earnings in short term investments that can easily be turned into cash for the company to expand. The company itself appears to be sound by many of the ratios that it has including return on equity and return on invested capital are both high and close to the same value. The only problem with Cherokee is that with only 20 employees according to msnmoney as of the date of this article, measurements like ROE are less important in my opinion and don’t mean as much.

It is true that having a lot of management and employees working for you however isn’t necessarily an advantage because many times some of the greatest companies like real estate companies simply don’t need employees to make money. It is true however in my opinion that as a general rule of thumb, the most successful companies are able to make money off others people’s labor. That means that large companies are good at paying people and getting more out of their work then they are actually paying them i.e. this shows in the income per share. As to whether or not they will stay in business for the long term is still to be seen; what do you think will happen to Cherokee brand which is in major retailers like Target, and what do you think of clothing brands in general? Also does Cherokee have a chance of standing up against other brands like TRLG True Religion?

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