Cherokee (CHKE)

The 11th stock in our Christmas Countdown is Cherokee (CHKE).

As the Motley Fool suggested a while back, you have to “look beyond the earnings” (translation: weak track record in recent years) when performing analysis on Cherokee. The company has clearly struggled while at the same time making considerable progress in recent quarters. The new acquisitions and relationships seem to be taking hold and if the company can regain some of its luster of a few years ago, significant price appreciation (along with above-average dividends) are possible here.

We know about turnarounds and our expectations are conditioned accordingly. That said, every one in a while it’s OK to reach for a Christmas miracle.

With a sales growth forecast of 6% (that could easily ramp to 6-12%), a net margin of 29.3% and a projected P/E ratio of 15x, the long-term return forecast is 19-20% (per annum).

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