CNBC’s Jim Cramer on Monday highlighted six fashion and apparel stocks for investors looking for an alternative to the sluggish AI trade.
Technology stocks have been under pressure in recent weeks, but consumer staples stocks have been resilient. of SPDR S&P Retail ETF (XRT) rose 10% this quarter; Technology Select Sector SPDR Fund (XLK) fell 11%. Cramer said lower interest rates could provide further tailwinds for apparel companies heading into the holiday season.
“Ralph Lauren, Tapestry, Levi’s, VF Corp., Contour Brands and Reformation are some of the fashion stocks that look best right now,” the “Mad Money” host said.
ralph lauren The company remains Mr. Kramer’s favorite apparel stock, thanks to consistent growth under CEO Patrice Roubaix. The company continues to gain momentum in women’s apparel, accessories and outerwear, strengthening its international presence, particularly in Asia. The stock tumbled in August and September, but has since recovered, and Cramer is optimistic ahead of Thursday morning’s earnings report.
tapestryCoach and Kate Spade’s parents also reported on Thursday. Kramer likes Coach’s position in the accessible luxury market, especially its popularity among young female consumers. However, after years of massive stock price gains, the stock has fallen 20% since the company’s August earnings report, where guidance failed to impress investors. “I hope this Thursday’s report is the beginning of a revival for Tapestry,” he said.
Levi Strauss This is another story that could turn around. Shares fell below $20 after disappointing results a few weeks ago, but CEO Michelle Gass told Cramer the company quickly responded to stock shortages in popular styles. The stock has since rebounded more than 20% from its post-earnings lows, but Cramer still thinks it’s undervalued, with a P/E ratio of about 14 and a dividend yield of 2.8%. “I think this is a good option to play to the broader strengths of denim that we keep hearing about,” he said.
VF CorporationThe company, which owns The North Face, Vans and Timberland, is showing signs of improvement, especially at Vans, after years of struggles. Kramer pointed to encouraging results from Piper Sandler’s recent survey of teenagers and a strong quarterly report as evidence that the sneaker brand’s renaissance may be gaining momentum. Since he recommended the stock about two weeks ago, the stock has risen about 14%.
Kontoor brand We offer new opportunities related to denim and corporate restructuring. The company plans to sell the Lee brand for up to $1 billion, allowing it to focus on Wrangler and outdoor apparel maker Helly Hansen. Kramer said he expects significant share buybacks after the sale, and that the remaining business has room for growth. The price/earnings ratio is approximately 14 times, and the dividend yield is nearly 3%.
Kramer’s more speculative choice is reform. Although the women’s fashion brand initially struggled after its IPO in late July, Kramer said it has “grown strongly, is highly profitable, and offers a differentiated shopping experience with a technology kicker.” Kramer highlighted the stock in late September. Shares rose more than 31% in October.
