Summary
Urban Outfitters has seen its stock triple from the lows last year.
While I love the story, and have for some time, the stock has simply come too far.
With a rising valuation and very high expectations, it looks like Urban Outfitters needs a breather.
The pendulum swings too far in the other direction
Urban Outfitters (URBN) was once one of my favorite picks in the retail space. The stock was bludgeoned down to the mid-teens last summer, a price that is almost difficult to believe at this point. Shares were obviously far too cheap then, but as we’ve rallied since, I cannot help but think we’ve swung too far in the other direction in the mid-$40s. The company’s fundamentals have undoubtedly improved, but given the valuation of shares today, I’ve become somewhat bearish on the stock. To be clear, I still like the story at Urban Outfitters, but investors must pay too much to be a part of it.
