When investors think about apparel stocks to buy, Nike (NYSE:NKE) is on many top 10 lists. At first glance, you could look at Nike stock and see that it’s up 53,000% in the 40 years since it went public. But that doesn’t accurately account for the seven 2-for-1 stock splits that NKE stock has executed in that time. It also doesn’t consider the overall return derived from the company’s dividend which, if it sees an increase in 2024, will mark 22 consecutive years of such growth.
Nike is a behemoth that has helped fortunate investors to make millions. But its best days may be behind it, so savvy investors should start looking into other apparel stocks to buy that have the opportunity to deliver massive gains over time. It’s a tricky task, especially at a time when many retail stocks are under pressure. Nevertheless, here are three apparel stocks to buy in 2024 that could pay off for long-term investors.
Putting Lululemon (NASDAQ:LULU) on a list of apparel stocks to buy may seem like an obvious choice. But if you’re looking for a company that has many of the attributes of Nike, Lululemon fits. For starters, the company is already an icon in the athleisure category. And it continues to expand its offerings to capture a larger audience and a higher share of their wallets. Not to mention the company’s pledge to have at least 75% of its products made from sustainable materials by 2025.
LULU stock has been trading publicly since 2007 and is already up over 3,200% in that time. That factors in a 2-for-1 stock split that the company undertook in 2011. LULU stock commands a high premium at around 56x earnings. However, this is still a company that is very much in growth mode, as shown by the fact that it doesn’t offer a dividend. And the company continues to grow revenue and earnings year-over-year (YOY) even in an environment where monetary policy is tightening.
Revolve Group (RVLV)
If you have an appetite for some risk, Revolve Group (NYSE:RVLV) is an intriguing small-cap pick among apparel stocks to buy. The company is a fashion retailer for Millennial and Gen-Z consumers. It’s a digitally native company that is taking steps into the brick-and-mortar world, but for now is being driven by the influencer market.
RVLV has only been a publicly traded since 2019, and it shot up during the pandemic. However, since hitting its all-time high in November 2021, the stock has been behaving like an overvalued tech stock. It’s down 80%. In 2023, the company reported more active customers and more orders placed, but a lower average order value. Not surprisingly, that shows up clearly in the company’s top and bottom lines, which are down YOY.
With short interest that’s over 13% of the stock’s float and more than 8 days for those shorts to cover, the payoff in Revolve stock is one that could take time to materialize. However, after falling in 2022, the company’s free cash flow () is back on the rise and the company is forecasting a solid cash position in coming years. This is a company that has its hooks into a coveted demographic. If monetary policy becomes more friendly, RVLV stock will be one to watch.
Express (NYSE:EXPR) is another small-cap stock that may be worth a long-term investment in the apparel sector. The company offers UpWest (a digitally native brand), Bonobos and Express brands for men and women.
The company isn’t profitable and revenue is down YOY, making this another stock that has high short interest. It’s also not heavily covered by analysts. However, the consensus price target of two analysts is $16.50, an increase of over 260% from the current price.
That’s still a far cry from the $142 price that EXPR stock hit in June 2021. It’s also a reminder that this isn’t just a small-cap; Express is a micro-cap company and investors just had to endure a 1-for-20 reverse stock split in 2023. It’s not for every investor, but if you want to find the next Nike while it’s still in the early stages, Express may be worth a look.
On the date of publication, Chris Markoch did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.