GAP
I brought GAP today at $20.47, they recently reported earnings and I was pretty impressed by them considering this is a tough environment to show positive same store sales in the apparel space but that is exactly what they did.
1) Based on guidance and I think they are being conservative here, they should do about $2.40 this year, which would be up from $2.20 this past year. Hence they are growing earning in a space that has many bad stories in it. I think GAP at minimum deserves a 12 multiple hence the stock should be worth about $29 in my opinion.
2) GAP recently raised the divy from $0.60 to $0.66 annually, where I brought that is roughly a 3.2% divy, although not huge, is still a plus.
3) GAP in q4 brought 75 Million of there shares back, I think this could be the start of them being more aggressive on that front.
4) GAP Generated 1.5 Billion in Operating Cash Flow in 2024, that is a significant, as a result they have a healthy balance sheet with roughly $6.75 in cash and short-term investment on the balance sheet. I see the fact that they are generating this kind of cash, and have really fixed there balance sheet here is impressive to me.
Conclusion: I like GAP here and think it was very attractive where I brought it. It is one of a few retail plays that actually look attractive to me right now, for a company that is generating this kind of cash flows, and growing the bottom line 8-10% I see no reason why It shouldn't conservatively get a 12 multiple. Time will tell. I will add more on weakness. All is just my opinion, and I could always be wrong though.
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