Replies to post #191144 on SwingTrade Member Forum (SWING)

[Rawnoc]

TWB, WEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE!!!!!

[MikeDDKing]

TWB is up 135% since my pick in this post!

Posted by: MikeDDKing Date: Tuesday, March 31, 2009 9:07:53 AM
In reply to: Rawnoc who wrote msg# 190855 Post # of 198627

TWB is an under-the-radar turn around play that I think is poised for some potentially big growth (potential mega bagger) over the next few quarters and possibly years. They are an apparel company that targets the girls TWEEN market (girls ages 7 to 14). Five years ago they started a new chain called Justice. It is a value oriented apparel store for the TWEEN market that is very popular with the girls. The Justice store chain has been a big hit and has grown rapidly to 335 stores as of November 2008. However, TWB has historically been the Limited Too chain which had 590 stores as of November of last year. That chain is somewhat higher priced that Justice and isn't as popular as it once was. Management made the decision in August to convert all the Limited Too locations into Justice! After the conversion TWB will consist entirely of Justice stores.

I personally found out about Justice when I picked up a gift card for my niece back in December. She specifically requested a gift card from Justice for her birthday. The place was packed. There were TVs on the wall playing Jonas Brothers and it was obviously a very popular place with the TWEENS. My sister-in-law told me that my niece really likes shopping there.

TWB was once highly profitable but is now losing money as are most companies in the apparel space. However, the conversion to Justice is going to save them $0.80-$1.00 per share annually. The conversion is almost done as they are just changing the signs on a few stores. The conversion will bring down costs dramatically and the higher popularity of the Justice concept will help as well. I think it is possible that we see TWB move from it's current price of $2.14 back somewhere near its old range of $30-$40 over the coming few years as the conversion to Justice takes hold, the economy recovers, and they return to profitability. They have a very solid balance sheet with tangible BV of $7.09/share including $3.23/share in cash. That balance sheet will serve them well as they work through their turn around.

My initial position in this stock is small as I watch the turnaround take hold. I intend to make the position bigger as evidence of the turnaround takes hold.