q Fashion and Clothing Stocks: Lists and Tips - Wall Street Survivor

Fashion and Clothing Stocks: Lists and Tips

FASHION AND CLOTHING STOCKS

Fashion and clothing stocks can be extremely lucrative if properly researched. Then practice what you’ve learned with our free stock market simulation.

POPULAR FASHION STOCKS

Restaurant stocks sitting comfortably at the top of the food chain:

Symbol Company
KORS MICHAEL KORS HOLDINGS LIMITED
RL RALPH LAUREN CORP
COH TAPESTRY INC
SHOO STEVEN MADDEN LTD
UFI UNIFI INC.

FASHION STOCK MARKET TIPS

Investing in clothing retailers can be a risky business due to the fickle nature of the fashion industry . As an investor, you are dependent not merely on the economy but on human tastes that change like crazy. Take these tips into account before investing:

  • Investing in a brand because you love it is okay…only if it’s an educated investment.
  • Visit the stores
  • Examine gross margin trends
  • Study inventory/receivable trends
  • Compare P/E ratios vs. expected earnings growth rates
  • Examine geographic footprint

OTHER CLOTHING STOCKS

Some known clothing stocks:

Symbol Company
GPS MICHAEL KORS HOLDINGS LIMITED
LB RALPH LAUREN CORP
LULU TAPESTRY INC
TGT STEVEN MADDEN LTD
ANF UNIFI INC
AEO AMERICAN EAGLE OUTFITTERS INC
UA UNDER ARMOUR INC
NKE NIKE INC
UFI UNIFI INC
GIL GILDAN ACTIVEWEAR INC

CLOTHING STOCK TIPS

Here are some tips worth considering before you go investing in clothing stocks:

Visit the Stores

Visit the store; check the look and feel of the products for yourself. Use your judgment. (Peter Lynch actually discovered Hanes stock because his wife came home from the store freaking over egg-shaped containers of stockings, called L’Eggs!) While visiting, analyze their promotional activities. Is the company promoting its merchandise to drive foot traffic or earnings? When companies desperately sell their products at deep discounts at the end of a season, margins and earnings are often negatively affected.

Examine Gross Margin Trends

A decline in gross margins (either sequentially or year-over-year) should be a serious red for an investor. Examine gross margins and make sure they are growing before investing.

Examine Same-Store-Sales Data

This data reveals how a store fares on a period-to-period basis and is arguably the most important metric in retail sales analysis.

Examine Inventory/Receivable Trends

When inventories grow at a faster rate than revenues, it’s likely due to the company’s inability to sell certain merchandise. Investors should be checking in on sequential and year-over-year trends in both inventories   and   accounts receivable to ensure that they are growing at the same pace as revenues.

Compare P/E Ratios Vs. Expected Earnings Growth Rates

“Cheap” companies are those that trade at an earnings multiple that is less than the expected growth rate. These companies may be worth a further look.


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