New year, new opportunities. Following a challenging year for the luxury sector in 2018, 2019 has brought a fresh set of opportunities and challenges for the industry. While there may be some reluctance from consumers in the face of economic uncertainty, this is also an opportune time to invest in high-growth stocks. Textile and apparel manufacturing continues to evolve with digital transformation and automation fast becoming standard across manufacturers.
In this article we look at top textile, apparel, and luxury goods stocks to buy now and hold throughout 2022.
Tapestry (TPR)
Tapestry is the world’s largest vertically integrated textile manufacturer and retailer with a diversified portfolio of brands. The company has a focused strategy to leverage the technology and automation of the textile industry to produce high-quality fabrics and apparel at scale. Tapestry has an attractive business model with low operating costs, high profit margins, and a commitment to reinvesting in their brands. As the largest vertically integrated textile manufacturer, Tapestry benefits from the scale of its business spurring technological innovation. The company has recently been investing in automation to further drive efficiencies and vertical integration. Automation will help Tapestry meet the challenges of rising labor and raw material costs, alongside an unpredictable trade environment.
Under Armour (UA)
Under Armour has been a pioneer in the athletic apparel and footwear industries for decades, having reached a significant scale over the last decade. The company continues to expand its product portfolio and geographic reach with a strong focus on innovation in design and materials. Under Armour has experienced significant disruption over the last 12 months due to a challenging macroeconomic environment and intense competition, with its stock price falling over 50% from a year ago. While the stock is down from its highs, the company remains well-positioned to capitalize on the opportunities ahead. Under Armour’s retail strategy is to focus on its premium and direct-to-consumer channels, while reducing reliance on wholesale partners. The company has been making strong progress in this direction with double-digit growth in its direct-to-consumer business, while reducing reliance on wholesale partners by nearly 10 percentage points over the last year.
VF Corporation (VFC)
VF Corporation is among the world’s largest apparel, footwear, and outdoor equipment manufacturers. The company has an expansive brand portfolio across these categories, with a focus on premium performance products. VF has a long history of operational excellence and a focus on innovation, including supply chain and product development. The company was a pioneer in bringing advanced fabrics and technologies to the apparel industry. VF’s portfolio of brands spans nearly every segment of the apparel, footwear, and outdoor equipment industries. This diversified portfolio allows the company to capitalize on a wide range of growth opportunities across numerous categories. VF has had a strong track record of returning cash to shareholders through buybacks and dividends. The company has reduced its share count by 30% over the last three years, while increasing its dividend by 15% over the same period.
Oxford Industries (OXM)
Oxford Industries is an iconic apparel company with a history dating back to 1891. The company produces a wide range of apparel, footwear, and accessories for women and men under a portfolio of high-end brands. Oxford has a strong track record of operational excellence and has proven to be an adept acquirer of brands with a rich history of quality in the apparel industry. Oxford has benefited from the migration of everyday clothing from brick-and-mortar stores to online. Oxford has been leveraging this shift to scale its online sales, while also expanding into new categories and geographies. Oxford has a strong balance sheet and a history of returning cash to shareholders.
Conclusion
The textile and apparel sector are expected to continue to benefit from rising middle-class populations across the globe, particularly in Asia. The industry is also expected to see an uptick in demand from evolving fashion trends, including at leisure. Now is an ideal time to invest in textile, apparel, and luxury goods stocks. These industries have a long history of strong growth and will benefit from the tailwinds of a strong global economy. These companies have all shown strong operational performance and are well-positioned to capitalize on the opportunities ahead. This is an opportune time to buy and hold these top stocks in the textile and apparel sector for the long-term.
