Time to Get Greedy With American Eagle Outfitters

Shares of American Eagle Outfitters (NYSE: AEO) popped 8% on Aug. 23 after the apparel retailer posted second quarter earnings that crushed analyst expectations. Its revenue rose 3% annually to $845 million, beating estimates by over $20 million. Its adjusted earnings dipped 17% to $0.19 per share, but still topped expectations by three cents.

Yet AEO remains down 20% for the year due to a broad sell-off in apparel stocks -- which are considered easy targets for fast fashion retailers and e-commerce challengers. Nonetheless, I believe that AEO is undervalued at current levels, and is a compelling investment for long-term investors who ride out the volatility.

Source: American Eagle Outfitters.

Source: Fool.com