CNBC Investing Club

Investing Club: Here's why we're reversing last month's downgrade of American Eagle

David Paul Morris | Bloomberg | Getty Images

Full disclosure: Club holding American Eagle was one of the portfolio's worst-performing stocks in the first quarter, and we have been pretty candid about how we got this so wrong and the lessons we have learned from owning shares in the retailer.

Last month we even recognized that the market wanted to take this stock lower, which is why we downgraded our AEO rating to a 2 from a 1 on March 21 when the stock traded slightly above $18. We thought investors should use the market volatility to opportunistically pick up shares of higher-quality names. 

But with shares now trading at about $16.50, or roughly 9% below the price from where we recently downgraded it, the question we are asking ourselves is: Has the market gotten too negative on American Eagle? 

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