Top 5 Textile Stocks of 2016 (HBI, AIN)
The U.S. textile industry has made a significant recovery since the Great Recession. The value of fiber and filament, textile and apparel shipments was estimated to be $76 billion in 2015, up roughly 14% since 2009. This can be attributed to reliable utilities, modern ports and airports, and a nonunionized workforce.
These are some of the top textile stocks that are well positioned to benefit from the industry’s revival.
HanesBrands Inc. (NYSE: HBI) manufactures men's, women's and children's apparel such as underwear, socks and T-shirts. Some of its more popular brands include Hanes, Champion, Playtex, Just My Size (JMS) and Lilyette. The company, founded in 2005, has successfully been able to position its products in a space where brand is more important than price. HanesBrands has a three-year average net income growth of 37.6%, strongly outperforming the industry average of 6.6%. As of Aug. 19, 2016, the stock had returned -4.08% year-to-date (YTD); however, its performance has substantially improved over the past three months, returning roughly 4%. It pays a dividend yield of 1.54% and has a $10.5 billion market cap.
Albany International Corporation (NYSE: AIN) is a textiles and material processing company that designs, manufactures and markets paper machine clothing. Its products are primarily sold in the United States and Canada. The company posted Q2 2016 net income of $10.4 million, after reporting a loss in the same period in 2015. Albany International agreed to acquire the composite aero-structures division of Harris Corporation (NYSE: HRS) in February 2016, which is likely to increase the company’s long-term growth opportunities. Investors had been rewarded with an 18.39% YTD return as of Aug. 19, 2016. Albany International pays a 1.58% yield and has a market cap of $1.4 billion. The stock is currently trading at $42.93, just 1.51% below its 52-week high of $43.59.
Interface Inc. (NASDAQ: TILE), founded in 1973, designs and produces modular carpet, commonly referred to as carpet tile. Its products are sold to the commercial and institutional interiors market, and distributed in over 110 countries. Interface reported earnings per share (EPS) of 32 cents for the second quarter of 2016, exceeding analyst’s expectations of 28 cents per share. The company’s three-year average revenue growth of 2.4% is almost double the textile manufacturing industry average of 1.3%. Interface has a $1.1 billion market cap and offers investors a 1.23% dividend yield. The stock had returned -9.87% YTD but advanced 8.75% over the past month, as of Aug. 19, 2016.
High Point, North Carolina-based, Culp Inc. (NYSE: CFI) has a market cap of $359 million. It produces upholstery fabrics and mattress ticking for the furniture and bedding industries. Culp’s stock performance has kept investors happy, with a YTD return of 16.29%, which outperformed the returns of the Standard and Poor’s (S&P) 500 index by roughly 10%, as of Aug. 19, 2016. At $29.27 per share, the stock is trading toward the top of its 52-week range between $22.61 and $35.23. Bulls should note that its 200-day moving average crossed above its 50-day moving average in mid-June 2016, referred to as a golden cross by technical analysts, suggesting further upside. Investors receive a 0.92% dividend yield.
Unifi Inc. (NYSE: UFI) manufactures and sells commodity yarns, specialized yarns and premier value-added yarns that are used to produce fabrics for the apparel, automotive upholstery, home furnishings and industrial industries. The company is based in Greensboro, North Carolina, and it is cheaper than its peers, with a price-earnings (P/E) ratio of 12.3; this compares to the textile manufacturing industry average of 17.2. Unifi has solid three-year average net income growth of 54.2%. Although the stock returned -6.32% YTD, it had performed strongly over the past three months, returning 8.79% as of Aug. 19, 2016. It has a market cap of $470 million.