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10 Best Clothing Stocks To Buy Now

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·8 min read
In this article:
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  • SFIX
  • GIII
  • PVH
  • RL
  • CPRI
  • GPS
  • NKE
  • M

In this article, we discuss the 10 best clothing stocks to buy now. You can skip our detailed analysis of the clothing industry and go directly to read the 5 Best Clothing Stocks To Buy Now.

The emergence of Covid-19 exacerbated the situation for the clothing sector, when retail sales fell by 14.3% in April 2020, due to the lockdown. Not only this, the average market cap of fashion companies dropped nearly 40% from January 2020 to March 2020, as reported by Mckinsey & Company. However, the industry coped well by shifting operations to online channels and facilitating the consumers. According to a paper published by the University of Pennsylvania, in 2020, e-commerce sales grew to 29% from 16% in 2019. Companies with strong digital channels showed a 42% higher valuation in the stock market than those without digital operations.

According to a report by Business Wire, the global fashion industry is expected to grow at a CAGR of 7%, reaching $39.8 billion in 2025, from $30.5 billion in 2021.

Some of the notable clothing companies include Nike, Inc. (NYSE:NKE), Capri Holdings Limited (NYSE:CPRI), The Gap, Inc. (NYSE:GPS), Tapestry, Inc. (NYSE:TPR), and Macy's, Inc. (NYSE:M).

Our Methodology:

Let's analyze our list of the best clothing stocks to buy now. The companies mentioned below deal in apparel, footwear, and accessories. These stocks have long-term growth potential and they are also extremely popular among the 873 hedge funds tracked by Insider Monkey.

10 Best Clothing Stocks To Buy Now
10 Best Clothing Stocks To Buy Now

Pixabay/Public Domain

Why pay attention to hedge fund sentiment while choosing stocks?

Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by wide margins. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

10 Best Clothing Stocks To Buy Now

10. G-III Apparel Group, Ltd. (NYSE:GIII)

Number of Hedge Fund Holders: 17

G-III Apparel Group, Ltd. (NYSE:GIII) showed a positive hedge fund sentiment in Q2, as 17 hedge funds tracked by Insider Monkey reported having stakes in the company, up from 14 in the previous quarter. The total worth of these stakes is roughly $100 million. G-III Apparel Group, Ltd. (NYSE:GIII) ranks tenth on our list of best clothing stocks to buy.

G-III Apparel Group, Ltd. (NYSE:GIII) is an American clothing company that designs and sells women’s and men’s apparel globally. In Q2, the company posted a GAAP EPS of $0.39, beating the estimates by $0.30. G-III Apparel Group, Ltd. (NYSE:GIII) reported revenue of $483.08 million, up 62.5% from the prior-year quarter. The company attributed the strong results to the well-developed supply chain operations.

This July, B. Riley lifted its price target on G-III Apparel Group, Ltd. (NYSE:GIII) to $41, with a Buy rating on the shares.

9. Kontoor Brands, Inc. (NYSE:KTB)

Number of Hedge Fund Holders: 23

Kontoor Brands, Inc. (NYSE:KTB), an American clothing company, declared a 15% increase in its quarterly dividend on October 21. The company will now pay a quarterly dividend of $0.46 per share, yielding 3.57%.

Arrowstreet Capital is the largest shareholder of Kontoor Brands, Inc. (NYSE:KTB) in Q2, owning shares worth $37.5 million. Overall, 23 hedge funds tracked in the Insider Monkey database reported having stakes in the company in Q2, up from 16 in the previous quarter. The total value of these stakes is $186.2 million.

This July, Goldman Sachs initiated its coverage on Kontoor Brands, Inc. (NYSE:KTB) with a Buy rating and a $69 price target. The firm’s analyst noted the company’s strategic actions and believes that it will gain momentum in the post-Covid period.

Curreen Capital mentioned Kontoor Brands, Inc. (NYSE:KTB) in its recently published Q3 2021 investor letter. Here is what the firm has to say:

“With Kontoor, we sold our position despite positive operating results. I do not want to cut the flowers, but with a slow-growing business like Kontoor, even excellent operating momentum can be relatively unattractively priced. When I wanted to buy Jackson in September, Kontoor appeared to be our least attractive investment. It is an excellent and well managed business, but the upside-to-downside was not as attractive as Jackson’s. We received $54.88/share.”

8. PVH Corp. (NYSE:PVH)

Number of Hedge Fund Holders: 28

PVH Corp. (NYSE:PVH) reported solid Q2 results, with an EPS of $2.72, beating the estimates by $1.52. The company recently attracted an Outperform rating from Wedbush, with a $130 price target.

PVH Corp. (NYSE:PVH) owns some of the most famous brands, such as Tommy Hilfiger, Calvin Klein, and Izod.

As of Q2, 28 hedge funds tracked by Insider Monkey have stakes in PVH Corp. (NYSE:PVH), compared with 34 in the previous quarter. The total value of these stakes is over $1.75 billion. Pzena Investment Management is the leading shareholder of PVH Corp. (NYSE:PVH) in Q2, with shares worth $835.8 million.

7. Ralph Lauren Corporation (NYSE:RL)

Number of Hedge Fund Holders: 32

Famous for its signature polo shirts, Ralph Lauren Corporation (NYSE:RL) ranks seventh on our list of the best clothing stocks to buy now. The stock hit an all-time low in April 2020, reaching $60 per share, but bounced back in the past year, gaining 59.1%.

Adage Capital Management is the largest shareholder of Ralph Lauren Corporation (NYSE:RL) as of Q2, owning shares worth $111.8 million. In addition, 32 hedge funds tracked by Insider Monkey reported having stakes in the company in Q2, down from 34 in the previous quarter. The total worth of these stakes is $690.6 million.

On September 10, Ralph Lauren Corporation (NYSE:RL) announced a quarterly dividend of $0.6875 per share, yielding 2.44%.

6. Stitch Fix, Inc. (NASDAQ:SFIX)

Number of Hedge Fund Holders: 35

Stitch Fix, Inc. (NASDAQ:SFIX) is a digital personal styling service that delivers customized orders to consumers. The company is also known for its affordable clothing range. Stitch Fix, Inc. (NASDAQ:SFIX) ranks sixth on our list of the best clothing stocks to buy now.

This July, Maria Ripps of Canaccord raised the firm’s price target on Stitch Fix, Inc. (NASDAQ:SFIX) to $76, while keeping a Buy rating on the shares.

The number of hedge funds tracked by Insider Monkey having stakes in Stitch Fix, Inc. (NASDAQ:SFIX) grew to 35 in Q2, from 28 in the previous quarter. The total value of these stakes is $702.7 million.

Like Nike, Inc. (NYSE:NKE), Capri Holdings Limited (NYSE:CPRI), The Gap, Inc. (NYSE:GPS), Tapestry, Inc. (NYSE:TPR), and Macy's, Inc. (NYSE:M), Stitch Fix, Inc. (NASDAQ:SFIX) is one of the notable clothing stocks in 2021.

RGA Investment Advisors LLC mentioned Stitch Fix, Inc. (NASDAQ:SFIX) in its Q2 2021 investor letter. Here is what the firm has to say:

“We purchased a new position–Stitch Fix–which is attacking this problem of abundance and the friction of shopping digitally head on with curation and personalization.

Your Own Personal Clothing Store

Stitch Fix is incredibly interesting. Founded by Katrina Lake in 2011, Stitch Fix turned apparel shopping into a delightfully personalized, subscription-based platform. The company collects numerous data points when onboarding a customer from the generics and quirks of each individual’s size and shape to tastes in designers, colors and styles. This empowers the company’s stylists to curate a “fix” with five clothing items on a periodic cadence (monthly, quarterly, semi-annually, etc.) of the customer’s choosing. A box arrives with its contents formerly unseen by the customer, with the constant being each item is already a known fit based on the size and shape of the customer’s body type and the trove of data Stitch Fix has on other “look alikes” across their customer base. Of the 5 items, a customer can keep all or none, but they must pay $20 irrespective of whether they keep anything. After reviewing the items, a customer can keep all items (for which they would get a 25% keep five discount) or return some items and checkout online to pay full price.

We owe immense gratitude to Mario Cibelli for helping us think through this company the right way (Mario covered the company in depth with Elliot on a recent episode of This Week In Intelligent Investing).

It is a company we first analyzed and found interesting heading into IPO, deploying the same customer lifetime value framework that led us into our Roku position early. Stitch Fix was intriguing and challenging through this lens, because churn is high in the measurable data, making the CLTV of each individual customer very sensitive to small changes in churn. Mario insisted the more appropriate way to think about this company is comparing them to a retailer like Nordstrom. People start their journey with Stitch Fix, buy a bunch of clothes over several months and then shut off the subscription once a satisfactory portion of their wardrobe has been replenished. Customers reengage once another round of refreshment is needed, but while some churn is the bad kind, not all fits that mold…”

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Disclosure. None. 10 Best Clothing Stocks To Buy Now is originally published on Insider Monkey.