INVESTMENT THESIS: American Eagle Outfitters is a specialty retailer with two major brands: American Eagle and Aerie. The American Eagle brand has made a major comeback thanks to the industry-wide revival in denim. AE is the number one jeans brand for 15- to 25-year-olds and is first in Women's jeans for all ages. Meanwhile, Aerie is one of the strongest retail concepts out there and has delivered an impressive 26 consecutive quarters of double-digit growth thanks to its positioning in fast-growing categories such as athleisure wear, loungewear, swimwear, and its Offline sub-brand. For these reasons, we believe American Eagle Outfitters is well-positioned to capitalize on the multiple spending catalysts set in the second half of 2021. More specifically, we are bullish on this specialty apparel name as a way to play what could be the biggest Back-to-School season in history as well as the child tax care credit stimulus checks that will be paid out from July through December.

See our initiation post in American Eagle Outfitters here.

Target Price: Reiterate $40; Rating: One