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Slip Into These Comfortable Clothing Stocks
We all wear jeans, active wear and underwear. So why not shop for investments in the clothing department too?
After all, the denim craze began several years ago and although many thought it was just another fad that would end badly for the related companies, in the long-term the fad turned into an investable trend. Here we take a look at some of the most investable clothing companies.
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Forever in Blue Jeans
There are two major players in the high-end denim niche sector: True Religion (Nasdaq:TRLG) and Joe's Jeans (Nasdaq:JOEZ). TRLG is about four times bigger than JOEZ based on market cap, but both are highly discounted to what I feel is fair value. First Call estimates TRLG will make $2.14 per share in 2010, followed by $2.44 in 2011. Based on 2010 EPS, the stock is trading at an attractive 11.1 P/E ratio.
JOEZ is a low-priced, microcap stock that is often overlooked by investors, but the company's jeans are rapidly growing in popularity. The company has continually grown revenue through the recession and with the addition of new retail stores, the growth should continue to improve. The 2011 estimate for earnings is currently 13 cents per share, but I feel it could come in higher than expected as gross margins increase with more sales directly through company-owned stores.
Active Wear
Under Armour (NYSE:UA) started out as a nobody and is now challenging the big names such as Nike (NYSE:NKE) and Reebok for supremacy of the athletic wear sector. Fundamentally, the stock is trading with a valuation that is acceptable, but not overly attractive. The 2010 earnings estimates are $1.10 and they jump to $1.29 in 2011, an increase of 17%. This is the type of stock that becomes attractive on pullbacks.
Also making active-wear clothing is Gildan Activewear (NYSE:GIL). It is not as well known and it generally provides clothing for screen-printing, but the stock is more attractive than UA. The stock is trading with a forward P/E ratio of 15.9 and the fact that its products cater to the wealthy and low-end consumer is an added bonus. Technically, the stock looks strong and will be attractive for purchase near $30 per share.
Underwear
Two large makers of under garments you've likely never heard of are Warnaco Group (NYSE:WRC) and Maidenform (NYSE:MFB). WRC is the larger of the two and trades at a more attractive price as of today. The PEG ratio for WRC is an undervalued 0.72 compared to 1.06 for MFB. Both stocks could be considered buying opportunities based on their fundamentals and sector, but from a pure valuation view, MFB is more attractive.
Some of the brand names connected with WRC include Calvin Klein, Chaps, Speedo and Olga. MFB manufactures brand names Maidenform, Bodymates, Sweet Nothings and Luleh, to name a few.
Maybe You Don't Wear Them
The names above may not be in your closet, but there is a good chance you own some of their brand-name merchandise. I know I have a few hanging around the house and chose some of the brands because I know them well and realize that if I am spending money on them, so are others. This goes with the old adage, "invest in what you know". (For more, see The 3 Most Timeless Investment Principles.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
IN PICTURES: 20 Tools For Building Up Your Portfolio
Forever in Blue Jeans
There are two major players in the high-end denim niche sector: True Religion (Nasdaq:TRLG) and Joe's Jeans (Nasdaq:JOEZ). TRLG is about four times bigger than JOEZ based on market cap, but both are highly discounted to what I feel is fair value. First Call estimates TRLG will make $2.14 per share in 2010, followed by $2.44 in 2011. Based on 2010 EPS, the stock is trading at an attractive 11.1 P/E ratio.
JOEZ is a low-priced, microcap stock that is often overlooked by investors, but the company's jeans are rapidly growing in popularity. The company has continually grown revenue through the recession and with the addition of new retail stores, the growth should continue to improve. The 2011 estimate for earnings is currently 13 cents per share, but I feel it could come in higher than expected as gross margins increase with more sales directly through company-owned stores.
Active Wear
Under Armour (NYSE:UA) started out as a nobody and is now challenging the big names such as Nike (NYSE:NKE) and Reebok for supremacy of the athletic wear sector. Fundamentally, the stock is trading with a valuation that is acceptable, but not overly attractive. The 2010 earnings estimates are $1.10 and they jump to $1.29 in 2011, an increase of 17%. This is the type of stock that becomes attractive on pullbacks.
Underwear
Two large makers of under garments you've likely never heard of are Warnaco Group (NYSE:WRC) and Maidenform (NYSE:MFB). WRC is the larger of the two and trades at a more attractive price as of today. The PEG ratio for WRC is an undervalued 0.72 compared to 1.06 for MFB. Both stocks could be considered buying opportunities based on their fundamentals and sector, but from a pure valuation view, MFB is more attractive.
Some of the brand names connected with WRC include Calvin Klein, Chaps, Speedo and Olga. MFB manufactures brand names Maidenform, Bodymates, Sweet Nothings and Luleh, to name a few.
Maybe You Don't Wear Them
The names above may not be in your closet, but there is a good chance you own some of their brand-name merchandise. I know I have a few hanging around the house and chose some of the brands because I know them well and realize that if I am spending money on them, so are others. This goes with the old adage, "invest in what you know". (For more, see The 3 Most Timeless Investment Principles.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Matthew McCall
Matthew McCall is the president of Penn Financial Group, LLC, a registered investment advisor. He also publishes two newsletters, The ETF Bulletin and The PFG Letter as well as other educational material. As a registered investment advisor, he manages clients' investments based on their specific goals and objectives.
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