It’s been a while, so this is going to be a collection of loose ends I’d like to tie up before moving on to (hopefully) a few new stocks in the next week:

-USG was up nicely of late after a few housing data points showed that things are pretty abysmal but things haven’t completely fallen off a cliff. It is still far too early to call a turn, but for the time being there was some tentative stabilization in sales rate as prices dropped a lot - chalk it up to the bargain hunters out buying. Housing starts are clocking in around 900k-1m, which is historically where the homebuilding industry has found a bottom in terms of construction.

Because I typically trot out some version of the FRED graphs from the St. Louis Fed to demonstrate long-run cyclicality in housing, I’m going to switch it up this time. This is from USG’s presentation at the Longbow Conference:

I continue to hold USG and think that buying under the $36 mark is a good bet for the patient. See the USG Stock Report for more.

-The nice thing about following teen retail stocks while in college is that the field research comes to you. After some admittedly poor timing on my purchase of American Eagle (AEO), I’ve started to track what kids are wearing pretty closely - and what I see backs up the sentiments expressed on the AEO conference call or most of their recent press releases closely… the men’s side is doing great, the women’s side is slowing - but I would say that the representation of American Eagle clothing is fairly high on both sides. While a reversal in fashion trends is obviously a top concern for retail investing, I’m still comfortable with their merchandise lineup.

I also visited an American Eagle store late last week, and will say that the company is certainly delivering on the promises made after the release of same-store sales: the markdowns are pretty broad-based and aggressive. For the time I visited (midday on a Thursday) I was impressed by the store traffic, particularly with the younger set who I would estimate to be 13-15. I thought Aeropostale (ARO) was supposed to be dominating that niche, but there was literally one next door to the American Eagle and the latter had all the traffic. Just a data point…

-American Express (AXP) was up about 15% intraweek as part of the rally in financial stocks. Again, this isn’t the kind of thing where you can look and proclaim the turn is at hand, but rather as a possible sign about where the market is pricing in a ton of pessimism - for AXP, around the low $40s if the last three months are any indicator. I’m not a dog and therefore I don’t chase big moves in stocks, so if AXP were to come back down into the low $40s I would continue to add.

It’s proven very dangerous to say that a stock - particularly in the financial sector - is down so much that it has to be a bargain, but American Express isn’t an investment bank or mortgage originator and actually has a steady base of business that should allow them to earn upwards of $3/share annually. In the low $40s, you’re paying a low double-digit earnings multiple, and I think that is a very fair price for the kind of favorable business economics the underlying company enjoys. Buffett will tell you that American Express’ moat is constantly expanding, but the real key is that it can do that with very little capital… thus the capital ends up back in the hands of shareholders - a great proposition from an owner’s perspective. A nod to Joe Ponzio for helping me key in on the importance of intangibles.

-I had a really spirited debate with my grandfather over Easter about the prospects for Apple (AAPL), of which he is holding a fair number of shares. I think my position on AAPL is fairly well documented, including my hypothesis that a large part of the rally in AAPL wasn’t due to its unique growth story, but rather a more secular trend toward growth in a slowing economy. On the flip side of that hypothesis is that as the economy reaccelerates, earnings growth won’t be as highly valued because it will be easier to do - this giving stocks like AAPL a lower multiple. He comes down in the camp that Apple really is a great story in itself, but I think some of the more, um, vocal followers have left the stock after the recent dump. David Neubert, who I regard very highly, said he would consider selling a few out-of-the-money calls on the stock and not one person chimed in that AAPL will break $200 in a month/week/next trading day. Froth doesn’t just make cappuccinos more interesting…

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Update: For those of you interested in technicals, I suggest a look at this Technical Analysis of AEO.