Tilly's, Inc (TLYS)


I based my parameters around the notion of growth, hoping to peg a stock with the potential for long term gains. Outside this, I maintained some extracurricular biases that fall outside of the course's presentations - that being: Is this a company that I, myself, would make much use of? If yes, then do some research! If not, hey, pass it over...

I set the screenings on p/e to low, while keeping the cash flow high. A number of industries followed, such as Life Insurance, electronics, but the only one I understood, vaguely, came up in Tilly's.

I don't buy much brand name clothing, so I can't say that this was something I would be overly interested in. And, as we know, e-commerce is only continuing to grow. Even at 10.00 a share, investing in a retail clothing company represents a big risk. Sure, people need clothes, that's true... But can we expected this company to survive the next recession? I went to the company's consumer relations to find out.

Opening it's first store in 1982, the Tilly's brand has seen it's fair share of ups and downs in the American economy. The Gulf War followed the first store's opening, and the residual fallout of the 2008 stock crisis still impacts millions of up and coming millenials - folks to whom this store is especially suited. I wanted to see how the company performed at these dates, but the Investing.com was being a little antsy. Instead, I was left with a news article on the company's high dividend yield: $29.1M total returns, but at the cost a 27% tax rate. That's from 2018. In 2019, the company posted a -4.7% drop in profits. That sounds scary, but it matched the trend that year both in retail sales and online ordering. Maybe they can keep up with the e-commerce game?

So, all things considered, I think Tilly's might be a reasonable investment. That it maintains itself in the shadow of e-commerce should be of no small esteem. We know that this company can hold it's own with abrupt economic changes, but the historical data shows a surprisingly short-term yield for it's investors. For folks hunting on those short term dividends, that's great; but for those of us who want a long-term fund, and are more than a little spiteful of taxation... Perhaps it's better to look elsewhere.

Overall, this exercise helped me to filter out some of my biases that I have about stockpicking, and gave me a few new tools to assist in trading. Maybe I'm wrong about this particular company, and will look back, years on, wishing I'd made this investment. I look forward to hearing the input from my classmate's.