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4 Stocks to Tap the Rebounding Apparel Industry

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The apparel industry had to bear the brunt of the COVID-19 pandemic last year as lockdowns across the world led to operational challenges. Moreover, demand for apparel was dented as consumers held back on such discretionary purchases. Nonetheless, the situation has been improving around the world, thanks to the ramped-up vaccination drive across major economies, allowing them to return to normalcy. This, in turn, bodes well for the apparel market as with economic activities resuming, both supply and demand-related challenges can be mitigated.

Notably, per a report by ResearchAndMarkets, the global apparel market is expected to witness a CAGR of 20.5% in 2021 to reach $635.17 billion, from $527.08 billion in 2020, as quoted in a Business Wire article. Moreover, the article mentioned that the apparel market is set to reach $842.73 billion in 2025 at a CAGR of 7%.

Comfortable Clothing Remains in a Bright Spot

Despite the havoc wreaked upon apparels last year, a particular type of clothing was in vogue. Being confined to their homes and having to work and learn remotely, people opted to wear more comfortable clothes. Moreover, with gyms and yoga centers being shut to avoid the spread of the virus, people decided to take care of their health at home by exercising. This is where comfortable clothing came to their aid since it allowed them to work, exercise and relax at home in one outfit.

A report by the NPD Group stated that even though total apparel sales in the United States witnessed a decline of 19% in 2020, comfortable clothing categories like sweatpants and sleepwear were the growth areas.

However, 2021 is seeing a resumption of activities across the country as more people are being vaccinated each day. Nonetheless, the preference for comfortable clothing is here to stay regardless of whether people continue to work from home or go back to work. The NPD report stated that a survey showed 70% of consumers plan to dress just as same or more casually than they did before the pandemic, once they return to work and other activities.

U.S. Fashion E-commerce Revenues Set to Rise

E-commerce has become a preferred way of shopping around the world. It allows consumers to shop from the comforts of their homes with a few clicks or taps on their desktops, tablets, or smartphones. Notably, this increasing reliance on online shopping has been noticed in the apparel market as well. In fact, a report from Statista showed that the share of fashion e-commerce in 2020 was roughly 29.5% of total fashion retail sales in the United States. Moreover, the report estimated that by 2024, U.S. retail e-commerce revenues from the sale of fashion apparel, footwear, and accessories will reach almost $153.6 billion compared to $110.6 billion in 2020.

4 Stocks to Buy Now

The apparel industry looks poised to make a comeback with the help of e-commerce as it recovers from the challenges of the pandemic. Hence, this seems like an opportune moment to consider investing in companies that stand to benefit from this uptrend. Notably, we have handpicked four such stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

G-III Apparel Group, Ltd. GIII designs, sources and markets women's and men's apparel. Its products include outerwear, dresses, sportswear, swimwear, women's suits, and women's performance wear and so on. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 4.5% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

Columbia Sportswear Company COLM, together with its subsidiaries, designs, sources, markets and distributes outdoor, active and everyday lifestyle apparel, footwear, accessories and equipment. The company sells its products through its network of branded and outlet retail stores and brand-specific e-commerce sites, among others. It currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 6.5% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

Gildan Activewear Inc. GIL manufactures and sells various apparel products and offers various activewear products, including T-shirts, fleece tops and bottoms and sport shirts, among others. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 0.7% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

Kontoor Brands, Inc. KTB designs, manufactures, procures, markets and distributes apparel under the Wrangler and Lee brands in the United States and internationally. The company sells its products primarily through mass and mid-tier retailers, specialty stores, department stores, and retailer-owned and third-party e-commerce sites, among others. It currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 1.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 42.2%.

Zacks Top 10 Stocks for 2021

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Columbia Sportswear Company (COLM) : Free Stock Analysis Report
 
GIII Apparel Group, LTD. (GIII) : Free Stock Analysis Report
 
Gildan Activewear, Inc. (GIL) : Free Stock Analysis Report
 
Kontoor Brands, Inc. (KTB) : Free Stock Analysis Report
 
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