Based in Nanjing, China, branded apparel retailer Ever-Glory International (NASDAQ:EVK) specializes in fashionable clothing at discounted prices. You won’t hear about EVK stock often in the American financial media. However, it’s an affordable stock that’s worth considering.
Granted, it takes an open mind to invest in EVK stock if you’re not already familiar with it. Yet, the concept behind Ever-Glory’s business model shouldn’t be unfamiliar at all.
Discount apparel has international appeal, after all. On the other hand, the world is living in a challenging time. The novel coronavirus pandemic must be factored into the equation if you’re going to trade stocks from different countries.
With that in mind, if you’re ready, let’s delve into the finer points of EVK stock and see if there’s a bullish case to be made.
A Closer Look at EVK Stock
Interestingly, Ever-Glory International started trading publicly in the U.S. back in July of 2008, on the former American Stock Exchange. Years later, on Dec. 31, 2014, EVK switched over to the Nasdaq Exchange.
When we analyze the history of EVK stock, it’s apparent that the stock is prone to quick and powerful price moves. However, that’s not entirely unusual for low-priced stocks.
To give you an example of how far EVK stock can go, consider that the share price rocketed from $1.35 in October 2012 to $8.15 in March 2014. That’s a 500% increase in a year and a half.
Does this mean that EVK will be a five-bagger again in 2021? Not necessarily. Still, it’s worth noting that the EVK stock bulls staged a huge comeback in 2020.
To be more specific, EVK stock bottomed out at 61 cents in May, but then ascended to $8.30 in early December. Unfortunately, that price point couldn’t be sustained and EVK settled at $3.53 on Dec. 23.
In order to gauge where EVK stock might be headed next, let’s now focus on the company as well as the addressable market in which it operates.
A Retail Giant
Even if Ever-Glory International isn’t a household name in the U.S., the company certainly has a strong presence in China.
The company’s clothing brands, which are mainly focused on women, include La go go, Velwin, Sea To Sky and Idole. In addition to having its own suite of brands, Ever-Glory International also does business a leading global apparel supply chain solution provider.
Currently, Ever-Glory International operates more than 923 retail locations in China. Even in a large country like China, that’s still an impressive number.
In terms of supply chain management, Ever-Glory International pretty much covers the full gamut of services. These include fabric development and design, manufacturing, customs clearance, distribution, logistics, sampling, sourcing and quality control.
So, by now you should have a better understand of Ever-Glory International considerable presence in the Chinese apparel market. Next, we must determine whether this market has growth potential. Otherwise, EVK stock probably wouldn’t be worth your investing capital.
A Quickly Growing Market
If you were asked to name the country with the world’s largest apparel market, you might say it’s the United States. You’d be right, but that could change within a few years. By the year 2023, research firm Global Data projects that China will overtake the U.S. as the largest apparel market in the world.
That’s probably already surprising to some people. Yet, what’s even more unexpected is Global Data’s identification of the Covid-19 pandemic as a contributing factor to China’s apparel market overtaking America’s.
Global Data expects “mature Western markets” to “lose out” as an increasing number of major American apparel chains file for Chapter 11 amid the Covid-19 crisis.
Meanwhile, Global Data retail analyst Vijay Bhupathiraju sees a phenomenon in China that he calls “revenge buying,” or the sudden release of pent-up demand from people who are willing and able to spend money.
Bhupathiraju reports, “Some brands across China for instance are seeing store sales return to 80 to 100 percent of pre-COVID-19 trading levels as the country relaxes lockdown measures.”
This presents a compelling bullish case in favor of China’s expanding apparel market. And, what’s bullish for China’s apparel market should also work in favor of EVK stock investors.
The Bottom Line
So now, you’ve gotten to know the basics on Ever-Glory International. This company has an extensive reach and offers a number of services within China’s apparel market.
And, that market is poised to grow exponentially in the coming years. Therefore, a position in EVK stock could provide surprising returns for investors willing to expand their horizons.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.