Victoria’s Secret Stock Just Hit New 3-Year Highs. Is It Naughty or Nice to Buy Now?

• Victoria’s Secret (VSCO) is trading at a new 3-year high.
• Shares are up more than 50% in the past month.
• VSCO has strong technical momentum and maintains a 100% “Buy” opinion from Barchart.
• However, analyst sentiment is sharply divided with price targets ranging from $36 to $78.21.

Today’s Featured Stock

Valued at $4.2 billion, Victoria's Secret (VSCO) is an intimate specialty retailer offering signature bras, panties, lingerie, casual sleepwear and athleisure, as well as prestige fragrances and body care.  

What I’m Watching

I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with the highest technical buy signals; superior current momentum in both strength and direction; and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. VSCO checks those boxes. Since the Trend Seeker signaled a new “Buy” on Nov. 21, the stock has gained 42.13%.

Barchart Technical Indicators for Victoria’s Secret

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

Victoria’s Secret hit a 3-year high of $53.38 on Dec. 11.

• VSCO has a Weighted Alpha of +83.22.
• Victoria’s Secret has a 100% “Buy” opinion from Barchart.
• The stock gained 10.39% over the past year.
• VSCO has its Trend Seeker “Buy” signal intact.
• The stock recently traded at $52.19 with a 50-day moving average of $36.04.
• Victoria's Secret made 14 new highs and gained 50% in the last month.
• Relative Strength Index (RSI) is at 79.24.
• There’s a technical support level around $51.03.

Don’t Forget the Fundamentals

• $4.2 billion market capitalization.
• 19.02x trailing price-earnings ratio.
• Revenue is projected to grow 4.03% this year and another 3.73% next year.
• Earnings are estimated to decrease 2.01% this year but rebound again by 10.60% next year.

Analyst and Investor Sentiment on Victoria’s Secret

It looks like Wall Street is greatly divided on this stock.

• The Wall Street analysts tracked by Barchart have given 5 “Strong Buy,” 4 “Moderate Buy” and 1 “Strong Sell” opinions on the stock with price targets between $36 and $60.
• Value Line rates it “Above Average” but at the same time has a price target of $38 for a 25% loss. That makes no sense.
• CFRA’s MarketScope Advisor rates it a “Strong Buy.”
• Morningstar thinks even with the stock’s recent runup, it’s 33% undervalued with a Fair Value of $78.21.
• The only investor following the stock on Motley Fool thinks it will beat the market.
• 31,150 investors are monitoring the stock on Seeking Alpha, which rates it a “Hold.”
• Short interest is high at 13.6% of the float.

The Bottom Line on Victoria’s Secret

Peter Lynch used to sit outside of retail stores and watch not only how many people went in a store, but also how many came out with purchases. Today at the mall I saw lots of women carrying Victoria’s Secret bags which was a good sign. I don’t know if they were buying for themselves or buying presents for their naughty or nice friends. On the flip side I see short interest at 13.60% which is a negative sign. I’d keep the stop losses tight.

Today’s Chart of the Day was written by Jim Van Meerten. Read previous editions of the daily newsletter here.

Additional disclosure: The Barchart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.