To OTC Journal Members: 
 

Recession or No Recession- Shoppers Delight

Ok, right off the bat, I'll be the first to admit this introduction might seem a bit sexist. Nevertheless, it's true based on my personal experience and observations.

What do women do when they are feeling great about their lives? They go out and buy shoes. What do women do when things aren't going so well? They go out a buy shoes. What do woman do when there's a recession? By now you've probably guessed it- they go out and buy shoes. And, what do women do when there's prosperity? A wild guess might be they go out and buy shoes.

Women's shoes as the all time fashion standard have plenty of historical precedent. Consider the shoe collection of Imelda Marcos- wife of former Phillipine dictator Ferdinand Marcos.

When the dictator was over thrown in 1986 the palace doors were thrown open. Amongst the absurd opulence contained within those walls was the shoe collection of Imelda Marcos- a mere 2700 pairs.

Consider Imelda would require 7.4 years if she wore a different pair every day to display the entire colllection on her feet.

Consider the entertainment franchise Sex and the City- years of appointment TV sitcoms followed by two movies. Star Sarah Jessica Parker's shoes were as much a star of the show as her character.

Sexist? Perhaps. True- certainly. Women love high fashion shoes, and the more affluent tend to own far more than they can ever wear (or store as is the case with my wife's closet).

Frankly, it's a little nuts, but hot fashion related stocks at the ground floor level can deliver massive profts. Think I'm exaggerating? Consider the following public companies:

• Timberland- Up 300%
• Lululemon- up 2572%
• Iconix Brands- up 242%
• Brown Shoe Co- up 385%
• Under Armour- up 550%
• Sketchers- up 151%
• True Religion- up 267%
• Lacrosse Footwear- up 104%
• Kenneth Cole- up 126%
• Wolverine Worldwide- up 218%
• Steve Madden- up 522%
• Crocs- up 2,112%

Obviously, these are not all high fashion brands, but a few are. These are all clothing and shoe manufacturers that came from nowhere to make investors the returns of a lifetime. Today's idea could be the next addition to the list. The foundation is laid, the product is flying off the shelves, and you're the first to know about it.
 

Auri Footwear (OTC BB: AURI): Already at a Store Near You

Every year Forbes publishes a list of America's 20 "Most Promising Young Companies". This year, Auri Footwear was ranked #8. Click on the link to read the Forbes review.

46 year old Orange County Entreprenuer Ori Rosenbaum founded the company in 2008, and early on made the commitment to quality and fashion. Coming off a quiet product launch in 2008, Auri Footwear can now be found in pretty much all the major metro areas in the US, and at many of the major department stores.

Live in California? You can find their shoes pretty much everywhere. Most shoppers would simply start at Nordstom- the chain has begun introducing the line at many of its stores.

They are also found in boutique stores all over the Bay Area. How about Georgia? Try Friedman's on Mitchell Street in Atlanta. Tennesse? Rangoni Firenzo in Nashville. New York? New York has Nordstrom now, but Orva Shoes carries the brand at 6 stores all over Manhattan.

This is still a young company, but clearly getting all sort of accolades and market penetration.

I spent a fair amount of time looking at the company's web site, and I can tell you these guys have designed a high end shoe line that will catch fire.

AURI has a full line of men and women's casual and fashion, and a line of fashion boots for women. The site can be found at www.aurifootwear.com. If you're considering taking a position in the stock, you need to spend a little time looking at their products. They have a list of states, and stores within those states that carry the brand. Find a retailer near you, and go ask if the product is selling.

This is the kind of product that can become viral. One article in the right magazine- one star wearing their product at a high profile event- any one of a number of possibilities could create a serious buzz around this company, and send women scurrying to the store to get their first pair before all their friends have them.

You Are First

“Auri shoes fit in next to Hugo Boss casual wear, Prada and Cole Haan shoes. People love them because they look good, fit well and they’re very reasonable. The shoes have a nice styling and are one of the stores best sellers.” - Dick Braeger, Owner - Gary’s, Newport Beach, CA.

AURI completed a merger into a public entity in February, so the stock doesn't have a big following yet. In fact, my readers are the first to learn about this company in any kind of distributed fashion.

The company recently disclosed it's first quarterly performance as a public company. While only delivering just over $300k in revenues, it was 118% above the previous year. More importantly, the increase on the women's side waas 629%, clearly demonstrating where their major growth will inevitably come from.

For a company like AURI, Q1 will be the worst of the year. It's the post Holiday Season quarter, and it's a regrouping time before the Summer/Fall fashions come out.

I don't know how much growth they will deliver throughout the remainder of 2011, but I'm very sure their best quarter will be Q4- the Holiday buying season. The stock market prices in performance about six months ahead of today, so it won't be long before the market starts pricing in Q4 for this one.

The chart looks extremely favorable for a move up. As the company made its public debut, the stock traded rather easily from about the $.35 range up. Usually with these sorts of stocks, it trades up for a month simply because the company achieves public status, and friends and family step in.

This stock found its way rather easily to $.80, before dropping 25% to the $.60 level, where it closed on Friday.

I believe the first move in this stock will take it back to its previous high of $.80 which would represent a profit of 33% on invested capital.

The upside potential on this one is considerably higher than a simple return to the previous high.

The timing is impossible to predict this being the middle of the summer, but I could see this stock trading into the $1 range in the very near future, so let's set that as my first target price. I'd use $.45 as your suggested stop loss.

This could also turn out to be a great one for longer term investors. If you have any doubt about the upside, consider how much early investors made on Crocs, Steve Madden, Lacrosse Footware, and Brown Shoe. Those were once in a lifetime investments.

Could this be your Crocs or Steve Madden? Hard to say at this point, but the fashions you can see in their line on the web site are outstanding.

If their products become viral, their stock can become viral as well. If the stock becomes viral, the profit potential is to $1, then add a zero or two. You decide. Very, very exciting.

As always, if the stock gaps up on Monday's open, show a little patience and trade intelligently.

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