Will The Gains For L Brands Stock Continue?

L Brands’ stock (NYSE: LB), an apparel-based specialty retailer focused on home fragrance products, body care, soaps and sanitizers, women’s intimate and other apparel, and personal and beauty care products, has increased around 8% over the last twenty-one trading days (one month) and currently stands at roughly $74. It should be noted that the broader S&P500 returned only a marginal growth during the same period. Victoria’s Secret (VS) has been showing weak performance for years, which is why L Brands is going to spin off VS into a stand-alone, separately traded company. While Victoria’s Secret still generated substantial revenue, over $1.5 billion in the first quarter of 2021 and $5.4 billion in 2020, that is still down from $7.5 billion the year before and the peak of $7.8 billion it reached in 2016.

Now, is LB stock poised to grow further? We believe the company remains fundamentally undervalued and there could be room for gains in the stock going forward. Specifically, there is a 64% chance of a rise for LB’s stock over the next month (twenty-one trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on LB Stock Chances of Rise for more details.

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Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last 10 year data

[1] 2% or higher return during a five-day period in 813 times out of 2517; Stock rose in the next 5 days in 418 of these 813 instances

[2] 17% or higher return during ten-day period in 81 times out of 2517; Stock rose in the next 10 days in 37 of these 81 instances

[3] 7.9% or higher return during twenty-one-day period in 596 times out of 2517; Stock rose in the next 21 days in 383 of these 596 instances

E-commerce is eating into retail sales, but this might be an investment opportunity. See our theme on E-commerce Stocks for a diverse list of companies that stand to benefit from the big shift.

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