In the past few weeks, everything apparel retail stocks have been crushed by the stock market. The headline retail stocks like Lululemon (LULU) and Sketchers USA (SKX) have seen declines of 20% or more as sales have failed to live up to expectations.
But investors are starting to throw the baby out with the bathwater, as some of the good retail stocks have been dumped by investors just fleeing the sector as the former darlings fall short. What investors need to realize is that consumers have not stopped buying clothes and shoes; they have just become much more selective about where they spend their money.
Investors should be equally selective about where they put their money, and Portfolio Grader can help you find the retail stocks with the very best fundamentals.
Iconix Brand Group (ICON) is in the business of licensing, marketing, and providing trend direction for a portfolio of consumer and entertainment brands. The company owns 33 well-known brands like Candie’s, Bongo, Joe Boxer, London Fog and Starter. It licenses the name for use in products like apparel, footwear, fashion accessories, home products and beauty products.
Business is pretty good for ICON, with a 31% increase in profits in the third quarter, and the company has posted four consecutive positive earnings surprises. You wouldn’t know it by the stocks movement in the past few weeks, as the shares have dropped about 8% amidst the markets decline. This is a huge buying opportunity according to Portfolio Grader, which just upgraded ICON stock to an “A” rating this week. ICON stock remains a “strong buy” at this price.
VFC Corporation (VFC) has also seen its stock slip along with the stock market. The stock is down almost 10% so far this year as investors have just sold many of the apparel and clothing related names indiscriminately. The company has several great lines of business, including brands like The North Face, Timberland, and Vans.
VFC’s denim products include the well-known Wrangler and Lee Brands. The company also offers apparel and accessories under iconic brands like the MLB, NFL, and Harley-Davidson brands. Earnings are up more than 20% this year, and the stock has been rated “A” by Portfolio Grader since December. VFC stock remains a “strong buy” today.
G-III Apparel LTD (GIII) makes and sells women’s and men’s apparel in the United States. The company offers products under several brand names including Andrew Marc, Jessica Howard, G-III, and Siena Studio. It also has 139 retail stores comprising 135 outlet stores under the Wilsons Leather name and four outlet stores under the Andrew Marc brand.
The company has shown consistent 20%-plus annual earnings growth and has posted three consecutive positive earnings surprises. Analysts are scrambling to keep up with the company’s success and recently raised estimates for both this year and next. GIII stock is down more than 4% this week in spite of the excellent fundamentals. Portfolio Grader just upgraded the stock to an “A” last week, and the shares are a “strong buy.”
So even though some apparel stocks are posting heaving declines, smart investors can use Porfolio Grader to find the best buys among all the out-of-style stocks.
Louis Navellier is the editor of Blue Chip Growth.