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As higher cotton prices have caused Hanesbrands shares to sell off, the underwear maker has become a "whipping boy" for those who think cotton prices will significantly affect profits, said analyst Doug Thomas on Thursday.
The Winston-Salem, N.C.-based company , however, recently gave guidance that suggests it will be able to pass higher costs onto consumers, the JET Investment Research analyst noted. It is also hedged for rising cotton prices through October 2011, he said.
A sell off in cotton would help HBI, though. Thomas pointed out that cotton is a cyclical commodity, which tends to rise and fall.
With the stock trading at 8.5 times earnings, Thomas thinks Wall Street isn't giving HBI the love it deserves. Guy Adami, managing partner at Drakon Capital, agreed.
---UNUSUAL ACTIVITY: YAHOO!
In the options market, Yahoo! saw an aggressive buyer get into the April 18 calls on Thursday, reports trader JJ Kinahan. The activity led to stock trading, as people seem to be buying shares in addition to trading options.
For his part, Kinahan is long YHOO . He called the Sunnyvale, Calif.-based company is the "redheaded stepchild" of the Internet. It's not the most loved Internet play, but Yahoo! has been around for a long time and a lot of people still use it, so he thinks there's a good chance someone may come in and do something with it.
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