True Religon - TRLG

This is a stock that I had researched a little last month when I bought my last batch of MFI stocks. To be honest, I had never heard of TRLG. But I am ptobably not as hip as you. They make jeans. I am a Wrangler man, but I thought this TRLG thing was worth a little digging.

They were not on the MFI list when I was doing my research, but they suddenly appeared this week, and I think it was similar to TGIS in that they had always been an MFI stock, just some data snafu kept them off for a month.

When I think of this company I think of that TD Waterhouse commercial where the guy is talking to his teenage daughter as she is asking him for money to buy the hottest jeans. Pretty ironic that a company like that actually exists.

I have my snappy new XL worksheet that pulls in key facts and figures and here is what I find out about TRLG:

• Their quarterly sales have increased steadily from March 2005 ($20.1m) to March 2006 ($35.6m).
• They just signed a deal to license their brand name (so I suppose True Religion perfume is next).
• They made 95 cents per share in past twelve months vs a stock price just under $18.
• Per the MFI their earning yield is 10% and Return on Capital is 103%.

You, the cynical one, may ask: "Is it all good news?"

Well, "no". The WSJ had an article about them yesterday. TRLG are found in upscale stores like Macys and Bloomingdales (which is probably good as Wal Mart is struggling). The article intimated that TRLG jeans have been showing up at some discounters *gasp*.

It almost reminds me of The Hobbit, when they first meet with Beorn. In that story Bilbo and the 13 dwarves had had a bad time of it and needed help. But instead of bringing all 14 people to Beorn at once, Gandalf first came with just Bilbo and then told their story and slowly had additional dwarves show up. Through this ploy, Beorn was so engrossed with the story that he did not object to all the mouths to feed.

Same thing (it seems to me) with TRLG. They said that they only sell "damaged" goods through the discounter Nordstrom Rack. They told reporters that if they found them elsewhere to call them as they were counterfeit. The reporter found them at New York's 21st Century. He called TRLG and they said, "oh Nordstrom Rack and 21st Century". Well, the reporter just found them at BJs Wholesale Club. He doesn't have an answer how they got there, but I am expecting a few more "dwarves" to be introduced shortly. So is the company lying, do they just not know where their jeans are being sold, or are the knock-offs? Does it matter if we want to invest?

Hmmm, I never get comments from my three readers. What do you guys think? Is the fad of TRLG over and you'll soon be able to find them in the bins of TJMaxx? Or are they a cheaply priced growth stock? Inquiring Minds want to know. Leave your vote in the comment box.

Justadrone... Out!