The garment manufacturing industry has been hit at the worst of the COVID-19 pandemic. However, with rising consumer spending, the industry rebounded last year. And because apparel demand is expected to remain strong this year, we think it might be a good idea to buy the lower prices of quality apparel manufacturing stocks Under Armor (UAA) and PVH (PVH). Let’s talk.
Clothing sales accelerated last year due to increased consumer spending. Reopening stores, introducing new fashion trends, adapting to customer preferences and expanding their digital presence have helped apparel makers recover ground after their slump in 2020.
As the economy continues to recover, demand for apparel is expected to increase due to rising employment levels and strong consumer spending. Consumers are expected to unleash their purchasing power as they return to their pre-pandemic lifestyle. Travel, resuming outdoor activities and returning to the office for work are expected to boost apparel sales. Global apparel market revenue is expected to grow at a pace 11.5% CAGR to $785.65 billion by 2025.
In this context, we believe it might be a good idea to acquire some quality Under Armour, Inc. apparel manufacturing inventory (UAA) and PVH Corp. (HPV). They are currently trading well below their 52-week highs, but have significant upside potential.
Under Armour, Inc. (UAA)
UAA in Baltimore, Maryland develops, markets and distributes branded performance apparel, footwear and accessories for men, women and youth. The company offers its garments in compression, fitted and loose fits for hot and cold. Its brand portfolio includes HEATGEAR, COLDGEAR and ARMOR FLEECE.
On November 10, 2021, UAA announced that it had chosen Amazon Web Services, Inc. as its cloud provider for SAP. This partnership will likely enable UAA to strengthen security, increase resilience, and provide valuable insights across its operations.
UAA’s net revenue for its fiscal year 2021 increased 27% year-over-year to $5.68 billion. The company’s adjusted net profit was $396.90 million, compared to an adjusted net loss of $120.17 million in the same period last year. Additionally, its adjusted EPS was $0.85, compared to an adjusted loss per share of $0.26 in the same period a year earlier.
Analysts expect UAAs PES for its 2023 fiscal year to rise 8% year-over-year to $0.81. Its revenue for the quarter ending March 31, 2022 is expected to increase 5.2% year-over-year to $1.32 billion. Additionally, it has exceeded street EPS estimates in each of the past four quarters. Over the past year, the stock price has fallen 33.4% to close the last trading session at $16.12. It is currently trading 40.9% below its 52-week high of $27.28, which it reached on November 19, 2021.
UAA’s strong fundamentals are reflected in its POWR Rankings. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree. It has an A rating for quality.
It is ranked No. 8 out of 36 stocks in the Athletics and recreation industry. Click here to see other UAA ratings for Growth, Value, Momentum, Stability and Sentiment.
PVH Corp. (HPV)
PVH in New York is a clothing company. Its portfolio consists of brands such as Calvin Klein, Tommy Hilfiger, Van Heusen, IZOD, ARROW, Warner’s, Olga, True&Co. and Geoffrey Beene. The company also designs and markets dress shirts, ties, sportswear, jeans, underwear, swimwear and other products.
On August 2, 2021, PVH announced the completion of the sale of certain intellectual property assets and other assets of its Heritage Brands business to Authentic Brands Group (ABG). The transaction included the IZOD, Van Heusen, ARROW and Geoffrey Beene brands and certain related inventory, as well as other assets. PVH Corp. CEO Stefan Larsson said, “PVH is entering a new chapter of growth, delivering on our accelerated recovery priorities and with a clear focus on unlocking the full potential of our iconic global growth brands. , Calvin Klein and Tommy Hilfiger. ”
PVH’s total revenue increased 10.1% year-on-year to $2.33 billion for the third quarter ended October 31, 2021. The company’s non-GAAP net income increased 103 .9% year-on-year to $192.10 million. Additionally, its non-GAAP EPS was $2.67, representing a 102.2% year-over-year increase.
For the quarter ending Jan. 31, 2022, PVH’s EPS is expected to increase 626.3% year-over-year to $2. Its revenue for its fiscal year 2022 is expected to increase 27.6% year-over-year to $9.10 billion. It has exceeded consensus EPS estimates in three of the past four quarters. Over the past six months, the stock has fallen 31.7% to close its last trading session at $75.03. It is currently trading 40.1% below its 52-week high of $125.42, which it reached on November 5, 2021.
PVH’s POWR ratings reflect a strong outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
It has a B rating for Growth, Value, Sentiment and Quality. In category A Fashion & Luxury industry, it is ranked #5 out of 66 stocks. To see PVH’s other ratings for Momentum and Stability, Click here.
UAA shares were trading at $16.61 per share Wednesday morning, up $0.49 (+3.04%). Year-to-date, the UAA is down -21.61%, compared to a -9.16% rise in the benchmark S&P 500 over the same period.
About the Author: Dipanjan Banchur
Ever since he was in elementary school, Dipanjan had been interested in the stock market. This enabled him to obtain a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan is particularly interested in reading and analyzing emerging trends in financial markets.
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