Fashion Stocks a Sound Addition to your Portfolio?
Clothes are a basic need to the human populace and will continue being trade items for decades if not centuries. Different brands exist in the apparel space and have gained significant revenue over their years of business. Some of the apparel brands have listed on stock exchanges and have derived benefits that come with listings. An example of such a benefit is increased liquidity. This eases operations via a strengthened financial standing. The below stocks give insight into the apparel or rather fashion stock realm and guide an investor or a potential for that matter on what to look for in them.
Ralph Lauren Corporation
Trading under the ticker symbol RL on the New York Stock Exchange (NYSE), Ralph Lauren was founded in 1967 by Ralph Lauren. The company is headquartered in New York, United States. It deals in apparels backed by fragrances, home appliances and accessories. The company’s financial figures are as below;
Market Cap: $ 8.115 B
Share Price: $ 110.42
Dividend Yield: 2.75
Revenue: $4.4 B in 2021 from $6.16 B in 2020
Beta (Signals Volatility): 1.52
PE Ratio: N/A
The company has an analyst rating of 2.4/ 5 as a buy with a share price target of $135.92 (Yahoo Finance).
* Scale: 1 is a strong buy and 5 a strong sell
Trades under the ticker symbol PVH on the NYSE. It was founded in 1818 and has clothing lines Calvin Klein and Tommy Hilfiger under its helm. It is headquartered in New York, United States. The company has survived two centuries and it shows an arguable resilience in its line of trade. It would be important to look into its adaptability to current markets and how its performance tells on sustainability into the future. Below are PHV’s financials;
Market Cap: $ 7.253 B
Share Price: $ 101.64
Dividend Yield: 2.75
Revenue: $7.13 B in 2020 from $9.91 B in 2019
Beta (Signals Volatility): 2.37
PE Ratio: 119.30
The companies PE ratio is high, which signals an overvalued business and could be an expensive buy. Analysts give a 2.5/5 buy with a share price target of $ 120.06
A luxury brand headquartered in Manhattan, New York, United States. The company trades under the ticker symbol TPR on the NYSE. It was founded in 1941 and has three brands under it; Stuart Weitzman, Kate Spade, and Coach New York. Below are Tapestry’s financials;
Market Cap: $ 11.285 B
Share Price: $ 40.47
Dividend Yield: N/A
Revenue: $ 4.9614 B in 2020 from $6.0271 B in 2019
Beta (Signals Volatility): 1.56
PE Ratio: 33.35
Tapestry shows relatively low volatility which is healthy for risk averse investors. The price to earnings ratio is also high but relatively lower compared to PVH. This therefore gives a discounted price discounted but does not necessarily mean the stock is undervalued. It is in the overvalued PE ratio territory. Analysts rate Tapestry as a 2.3 buy with a share price target of $53.81.
Michael Kors founded the company in 1981 in New York, United States. Kors was an American fashion designer who grew the company to a multinational brand that now has executive offices in New York and London. The company also sells shoes, handbags, watches among other accessories. Listed on the NYSE, the company trades under the ticker symbol CPRI. Below are its financials;
Market Cap: $ 7.479 B
Share Price: $ 49.42
Dividend Yield: N/A
Revenue: $ 4.06 B in 2021 from $5.551 B in 2020
Beta (Signals Volatility): 2.53
PE Ratio: N/A
Capri holdings has a relative higher volatility and shows more price fluctuation compared to Tapestry. The company’s PE ratio is not given but has a negative Earnings Per Share (EPS) of -0.41. The negative EPS could signal debt on its book used to finance operations and expansion hence does not necessarily translate to poor performance. Analysts rate it a 2.2 buy with a target share price of $68.89.
Levi Strauss & Co.
Founded in 1853, San Francisco, California, United States, the company is widely known for its denim jeans line. The founder was a German immigrant named Levi Strauss who moved to from Bavaria to San Francisco. The company trades under the ticker symbol LEVI on NYSE. Below are the company’s financial figures;
Market Cap: $ 10.659 B
Share Price: $ 49.42
Dividend Yield: 0.18
Revenue: $ 1.94 B in 2020 from $5.763 B in 2019
Beta (Signals Volatility): 1.15
PE Ratio: 37.16
The volatility in this stock is relatively low and risk-averse friendly. The dividend yield is low showing an overvaluation and a possible dividend increase into the future. The PE ratio is high and signals relative overvaluation which is not extremely expensive reading from the company’s share price of $49.42. Analysts give the company a strong buy rating of 1.7 with a target share price of $34.88.
A special concern for my readers is LVMH. This brand in full form is known as Louis Vuitton Moet Hennessy and unlike the above mentioned brand, it is headquartered in Paris, France. The company was founded in 1987 by Henri Recamier and Alain Chevalier in Paris, France. Evidently, the company is relatively younger than all the mentioned brands herein. It trades on the Paris Stock Exchange. Below are the company’s financials;
Market Cap: EUR 346.705 B
Share Price: EUR 687.80
Dividend Yield: 6.00
Revenue: EUR 44.65 B in 2020 from EUR 53.67 B in 2020
Beta (Signals Volatility): 0.96
PE Ratio: 73.84
The company has a strong market capitalization backed by its PE Ratio which makes it an expensive buy. The beta is low indicating little price fluctuation which is attractive to risk averse traders. Analysts rate it a strong sell with a target price of EUR 319.92. It is important to note analyst sentiments are not always right and mostly offer market guidance. The company has a strong brand recognition and loyalty besides its premium pricing. Therefore, a sell decision or sentiment would be risky and needs deeper insight.
Summarily, all companies mentioned herein experienced revenue declines. This is significantly attributed to the COVID-19 pandemic. Whether you are a growth or value investor, it is agreeable that these stocks offer potential opportunities for your portfolio’s diversification.
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