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What's the Deal With Vera Bradley?

Vera Bradley (VRA) just IPO'd this week. It's seen a nice little pump but is starting to settle down a bit:

Now I'm not a fundamental investor, nor do I aspire to be-- but this particular stock holds a special place in my heart.

Not so long ago, I was in college and a member of a fraternity; I was also president for a bit, but that's a completely different set of stories. Of course you will always have the classic stereotypes about Greek life and how men and women of that collegiate subset all dress the same.

Let me set the record straight-- it's all true. And Vera Bradley is an essential part of any smart sorority girl's wardrobe.

VRA is best known for their purses and bags. Big, dumb, ugly, overpriced accessories.

she must be a tri-delt!

she must be a tri-delt!

This bag is quintessentially college. Like the duck face, watching Jersey Shore, oversized sunglasses, and running tights with Uggs. It makes no sense, but this sort of irrational buying helps to keep these bags at a premium.

So let's run through the product checklist:

  • May be essential in a college girl's wardrobe
  • It's actually really, really ugly and makes no sense to own
  • Absurd pricing creates a paradox of value
  • There are plenty of knockoffs

We've seen that list before in various stocks. We have CROX (Crocs), DECK (Uggs), SHOO (Stupid Boots), TIF (Blue Boxes), COH (more big ugly bags) and LULU (overpriced yoga pants).

Find any stock that matches those characteristics above and take a look at the chart. All are in solid uptrends and great momentum stocks. It should follow that Ms. Bradley's stock will continue on this same path.

by Steven Place

Steven Place is the founder and head trader at investingwithoptions.com/