A few weeks ago, I placed a buy on American Eagle Outfitters, Inc. (AEO) based on an advertising campaign featuring Sydney Sweeney.
I wrote:
“Sales Impact: Short-Term Win, Long-Term Risk
Early signs point to success. AEO’s stock soared 18% to $11.74, adding $200–228 million to its market cap, driven by viral buzz and meme stock frenzy. Sweeney’s influence, paired with innovative marketing (Las Vegas Sphere ads, TikTok recreations), is boosting mall traffic and online engagement, critical for Gen Z’s 70% online brand interaction. The campaign’s “anti-woke” edge appeals to a niche but loud segment, potentially spiking Q3 2025 sales.
Valuation and Technical Analysis
At $11.74, AEO is undervalued:
- P/E Ratio: 12.3, well below the US retail average of 18.7, signaling a bargain.
- Price/Sales: 0.6, indicating AEO trades at a discount to revenue.
- Debt/Equity: 0.4, reflecting a strong balance sheet.
- Dividend Yield: 4.16%, offering solid income.
- Market Cap: $2.08 billion, down from a 52-week high of $22.83 but up from a low of $9.27.
Technical Analysis: AEO’s chart is bullish.
The stock broke its 50-day moving average post-campaign, with high volume confirming momentum. The MACD shows a bullish crossover, and the stock is testing resistance at $12.50. A break could target $15, a 27% gain. Support at $10.50 offers a solid risk/reward.
The Verdict: Buy AEO
American Eagle’s Sydney Sweeney campaign is a medium-risk, high-reward move that’s hitting its Gen Z female target, particularly those drawn to “anti-woke” aesthetics. The viral buzz and Sweeney’s star power should drive Q3 2025 sales, despite backlash from progressive teens. At $11.74, AEO’s low P/E, strong dividend, and technical breakout make it a steal. Meme stock momentum and short interest add fuel. Investors should seize this opportunity before the next leg up.
Recommendation: Buy AEO at $11.74 with a target of $15–$17 by year-end 2025. Set a stop-loss at $10.50 for risk management.”
Today, my bullish call on AEO paid off. AEO is up 33% today alone!
The company beat on top and bottom lines. During the conference call, the head of marketing said, "The American Eagle Sydney Sweeney campaign was intended to be a brand and business reset, and it has. Sydney Sweeney sells great jeans. She is a winner. And in just six weeks, the campaign has generated unprecedented new customer acquisition."
That’s good enough for me. It’s time to sell the news and take profits. If you bought on July 29 at $11.74, sell today at $18.15. That’s a 55% gain in just five weeks. Outstanding!
If you want some more wins like this and you haven't joined our premium service, more gains are just a click away. Check it all out here.
All the best,
Christian DeHaemer
