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Polo Ralph Lauren: After The Crash

Three weeks ago I wrote a very bearish piece about how I thought Polo Ralph Lauren (RL) was setup for a fall. In the article I noted that RL has traded in a very predictable channel for years and that the stock was, at the time, bouncing off of the top of that channel. I also pointed out that I felt the fundamentals simply didn't support the valuation and that the stock was ~$140 or so, a huge discount at the time of about $35 per share. Well, as we know now, RL's third quarter earnings came out earlier this week and it was, let's say, not pretty.

(click to enlarge)

We can see from the chart that investors did not appreciate what RL had to say for its fiscal third quarter as the stock was absolutely pummeled on the day, eventually dipping below $140 before a small rebound has… Read More …