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This year hasn’t been the best for the Textile - Apparel industry, which employs more than four million people in the U.S. and contributes $400 billion to the economy, according to the American Apparel & Footwear Association (AAFA).
This is an industry that’s closely tied to exports and imports as raw materials, yarns, machinery and finished products are always crossing borders. As such, it is practically impossible for this industry to function without smooth international relations.
And that’s the first big problem that it has encountered this year with the government doubling down on tariffs most particularly on China, as that country didn’t honor its end of the trade deal. More recently, 25% additional tariffs were also levied on EU countries for things like sweaters, pullovers, sweatshirts, suits and swimwear. This has increased costs for retailers, offsetting some of their gains from lower taxes.
The FTC’s “Made in USA” labeling rule is a potential overhang.
When the pandemic hit this troubled market, stores closed and people started operating from home. So this cut down on their apparel purchases, although some of the spending was diverted to at-home clothing and footwear. The spinners and sewers were a little better off, because they could ship their yarn to PPE manufacturers in the U.S. or across the border to Mexico and other Central American countries.
The typical boost from the back-to-school season didn’t quite happen this year, so all hopes are currently pinned on the holiday season, which shouldn’t be too bad.
Almost every apparel retailer with any degree of success today is tapping the digital route, either through owned ecommerce channels or a marketplace like Amazon. Order online pick up in store is also a popular choice.
Against this backdrop and considering that the industry is in the top 11% of Zacks-classified industries (the top 50% outperforms the bottom 50% by a factor of 2 to 1), here are some players that are likely to do well-
The company is expected to grow revenue and earnings both this year and the next. The Zacks Consensus Estimate for 2020 moved up a couple of cents 7 days ago.
It has topped estimates in three of the last four quarters and benefited hugely from the pandemic in the last quarter, beating estimates by 741.7%.
The earnings ESP of 2.56 indicates that there’s a good chance of it beating estimates in the September quarter as well. The company reports on Oct 27.
Delta Apparel, Inc.
Zacks Rank #1
Value Score A
Growth Score B
Momentum Score A
The company is expected to growth both revenue and earnings next year. The 2020 and 2021 earnings estimates are up 45 cents and 41 cents, respectively in the last 7 days.
It did relatively well in the June quarter, beating by 25.2%.
The Earnings ESP of 0.0% indicates a fair chance of beating estimates when it reports on Nov 19.
The company is expected to see declines in both revenue and earnings this year followed by a strong rebound in 2021. The Zacks Consensus Estimate for 2020 and 2021 moved up slightly by a respective 2 cents and 1 cent 7 days ago.
The company topped estimates in each of the last four quarters and appears to have benefited from the pandemic in June, when it beat by 31.3%.
The earnings ESP of 2.20 indicates that there’s a good chance of it beating estimates in the September quarter as well. The company reports on Oct 29.
The company is expected to see declines in both revenue and earnings this year followed by a strong rebound in 2021. The Zacks Consensus Estimate for 2020 and 2021 are unchanged in the last 7 days.
The company topped estimates in three of the last four quarters and appears to have benefited from the pandemic in June, when it beat by 98.4%.
The Earnings ESP of 0.0% indicates a fair chance of beating estimates when it reports on Nov 24.
Revenue and earnings declines in the current year will be followed by a strong rebound in 2021.
The Zacks Consensus Estimates for 2020 and 2021 are up a respective 20 cents and 14 cents in the last 7 days.
In the September quarter, it beat by 31.4%, following three strong beats in the previous three quarters.
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Image: Bigstock
5 Apparel Stocks to Buy Today
This year hasn’t been the best for the Textile - Apparel industry, which employs more than four million people in the U.S. and contributes $400 billion to the economy, according to the American Apparel & Footwear Association (AAFA).
This is an industry that’s closely tied to exports and imports as raw materials, yarns, machinery and finished products are always crossing borders. As such, it is practically impossible for this industry to function without smooth international relations.
And that’s the first big problem that it has encountered this year with the government doubling down on tariffs most particularly on China, as that country didn’t honor its end of the trade deal. More recently, 25% additional tariffs were also levied on EU countries for things like sweaters, pullovers, sweatshirts, suits and swimwear. This has increased costs for retailers, offsetting some of their gains from lower taxes.
The FTC’s “Made in USA” labeling rule is a potential overhang.
When the pandemic hit this troubled market, stores closed and people started operating from home. So this cut down on their apparel purchases, although some of the spending was diverted to at-home clothing and footwear. The spinners and sewers were a little better off, because they could ship their yarn to PPE manufacturers in the U.S. or across the border to Mexico and other Central American countries.
The typical boost from the back-to-school season didn’t quite happen this year, so all hopes are currently pinned on the holiday season, which shouldn’t be too bad.
Almost every apparel retailer with any degree of success today is tapping the digital route, either through owned ecommerce channels or a marketplace like Amazon. Order online pick up in store is also a popular choice.
Against this backdrop and considering that the industry is in the top 11% of Zacks-classified industries (the top 50% outperforms the bottom 50% by a factor of 2 to 1), here are some players that are likely to do well-
Crocs, Inc. (CROX - Free Report)
Zacks Rank #1
Growth Score A
The company is expected to grow revenue and earnings both this year and the next. The Zacks Consensus Estimate for 2020 moved up a couple of cents 7 days ago.
It has topped estimates in three of the last four quarters and benefited hugely from the pandemic in the last quarter, beating estimates by 741.7%.
The earnings ESP of 2.56 indicates that there’s a good chance of it beating estimates in the September quarter as well. The company reports on Oct 27.
Delta Apparel, Inc.
Zacks Rank #1
Value Score A
Growth Score B
Momentum Score A
The company is expected to growth both revenue and earnings next year. The 2020 and 2021 earnings estimates are up 45 cents and 41 cents, respectively in the last 7 days.
It did relatively well in the June quarter, beating by 25.2%.
The Earnings ESP of 0.0% indicates a fair chance of beating estimates when it reports on Nov 19.
Kontoor Brands, Inc. (KTB - Free Report)
Zacks Rank #2
Value Score A
Growth Score B
The company is expected to see declines in both revenue and earnings this year followed by a strong rebound in 2021. The Zacks Consensus Estimate for 2020 and 2021 moved up slightly by a respective 2 cents and 1 cent 7 days ago.
The company topped estimates in each of the last four quarters and appears to have benefited from the pandemic in June, when it beat by 31.3%.
The earnings ESP of 2.20 indicates that there’s a good chance of it beating estimates in the September quarter as well. The company reports on Oct 29.
Guess, Inc. (GES - Free Report)
Zacks Rank #1
Value Score A
The company is expected to see declines in both revenue and earnings this year followed by a strong rebound in 2021. The Zacks Consensus Estimate for 2020 and 2021 are unchanged in the last 7 days.
The company topped estimates in three of the last four quarters and appears to have benefited from the pandemic in June, when it beat by 98.4%.
The Earnings ESP of 0.0% indicates a fair chance of beating estimates when it reports on Nov 24.
V.F. Corporation (VFC - Free Report)
Zacks Rank #2
Momentum Score B
Revenue and earnings declines in the current year will be followed by a strong rebound in 2021.
The Zacks Consensus Estimates for 2020 and 2021 are up a respective 20 cents and 14 cents in the last 7 days.
In the September quarter, it beat by 31.4%, following three strong beats in the previous three quarters.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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