Quicksilver (ZQK) Trends Up Last 3 Sessions, Looks Strong
I was checking out some stocks today and one that I hold is Quicksilver (ZQK), which has lost significant value over the past 52 weeks most likely due to the law that when the economy suffers, people buck “image” and focus on “function”. Quicksilver is a fashion retailer and trend setter in the “board-sports” arena, well known for surf/sun/swim apparel. The company’s founder, Bob McKnight, has been more recently highlighted on high tech IBM/Microsoft commercials for his opinions on riding the wave of technology in the modern business environment.
This attention given to a stock that traded at under .10/share earlier this year (albeit for just a momentary dropout in an otherwise subpar trading day).
Currently the stock is hovering at around $1.90/share. This after floating at 1.60 for weeks now as the market has seen some rough patches in this month’s trading.
But it appears to be on the uptrend now. Is this here to stay?
Well one of the most obvious indiciators of this stocks future play, is seen in its book value at $3.00, while the market values this stock at under $2.00. That means there is plenty of room for the market value to increase (50%).
Thursday indicated this possibility with a nearly 18% increase in market price within a 2 hour late morning rally. But is such continued growth sustainable over the next months?
Retail is a cyclical industry, with sales cycles that are seasonal. My bet is that with the new schoolyear coming up, this traditionally begins the real money-making fiscal quarter. In addition, holidays signify gift purchases, and vacations in mid-winter are usually when the hottest surf spots (and travel deals to get there) are abustle with life. All this ends with spring breakers and a need for new apparel for the beach.
So looking at the product offering of Quicksilver, their jeans are reasonably priced for being sponsored by professional athletes (pro surfers). We’re talknig jeans in the $50-$75 range. And the consumer purchase pattern of a Quicksilver customer is a time-tested formula: Start with some board shorts. Build up from there.
Combine this with the power of the DC Shoes brand owned by Quicksilver. The shoe brand has been endorsed heavily on MTV by Rob Dyrdek among others as THE skate shoe of the pro huckers.
There is just so much potential to this brand, and the history to give it good footing. And at under $2.00 it’s a steal. I put this on my list of stocks to hold until spring 2010.