Foot Locker shares could regain their upward trend after having run out of steam.
The sportswear and footwear retailer displays attractive fundamentals: a low valuation (P/E ratio of 15.1x for 2015) and an increasing profitability (EPS should increase by 21% in 2015). Analysts covering the stock are optimistic and target a 16% potential gain on average.
Technically, the uptrend in the medium and long term should protect the stock of a major downtrend. In the short term, prices went through a consolidation phase close to the USD 54/58 resistance area, which led the stock on the USD 51.75 mid-term support. This threshold tested several times is likely to allow a technical rebound and resurrect the bullish trend.
Active investors should open a long position immediately on the security to benefit from this anticipated rebound. The target price can be set at USD 54.5 and USD 58 by extension. A stop loss will be fixed below the entry point to limit the risk of the strategy.
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Foot Locker, Inc. is a retailer of shoes and apparel. The Company operates through three segments: North America, Europe, Middle East, and Africa (EMEA), and Asia Pacific. The Company's portfolio of brands includes Foot Locker, Kids Foot Locker, Champs Sports, WSS, and atmos. It uses its omni-channel capabilities to bridge the digital world and physical stores, including order-in-store, buy online and pickup-in-store, and buy online and ship-from-store, as well as e-commerce. It operates websites and mobile apps aligned with the brand names of its store banners. The Company operates approximately 2,523 stores in 26 countries across North America, Europe, Australia, New Zealand, and Asia, and a franchised store presence in the Middle East and Asia. The Kids Foot Locker offers athletic footwear, apparel, and accessories for children. Champs Sports is a primarily mall-based specialty athletic footwear and apparel retailer. atmos is a digitally led, brand featuring sneakers and apparel.