Lululemon & 5 More Apparel Stocks To Buy On Earnings Momentum

With splendid Black Friday and Cyber Monday sales behind us, the enthusiasm for the upcoming holiday season is definitely on a high. The holiday season is an opportunity for retailers to make good the lost sales over the past year. The favorable economic data be it GDP growth, unemployment rate or Consumer Confidence, all indicate that this year’s holiday season is going to be a Christmas feast for both consumers and the retailers.

This enthusiasm was clearly visible in the earnings of most apparel retailers, which reported earnings in the past few weeks. These leading apparel sellers have been spurred by the initial holiday sales in the Thanksgiving weekend, and consequently provided a robust outlook for the fourth quarter while raising their guidance for fiscal 2017.

Lululemon Athletica Inc. (NASDAQ:LULU) is one such stock that not only came up with solid third-quarter fiscal 2017 results, but also raised forecasts for fiscal 2017. The company reported both top and bottom-line beat in the third quarter. While this marked the company’s third consecutive earnings beat, sales topped estimates for the eighth straight quarter. (Read More: Lululemon Jumps on Q3 Earnings & Sales Beat, Ups View)

Much of this improvement can be attributed to the consumers’ favorable response to Lululemon’s product innovations, solid direct-to-consumer (“DTC”) sales, focus on supply chain initiatives and the company’s commitment to its long-term strategy. Further, the company is on track with the remodeling of its ivivva business into an online brand, as announced in June 2017.

Taking into consideration the incredible enthusiasm for the holiday season along with efforts to build supply chain network and e-commerce business, the company remains hopeful about the coming quarters.

The company witnessed an improvement in store traffic in both the United States and Canada through the first five weeks of the fiscal fourth quarter due to the initial holiday season fervor. To gain from the increased traffic and satisfy holiday shoppers, the company has opened 22 pop-up seasonal stores in the high traffic areas and malls. This will help in capturing really good business during the holiday season.

Further, it expects the momentum across business channels since the start of the fourth quarter to continue through the holiday season. These factors and a favorable third-quarter led the company to provide an encouraging view for the fourth quarter and raise guidance for fiscal 2017.

Notably, this yoga apparel retailer has gained 19.7% in the last three months, outperforming the industry’s growth of 5.7%. Further, the company has an expected long-term earnings growth rate of 11.1%. Also, a Momentum Score of A and Zacks Rank #2 (Buy) justify that the company has more room to run in the bourses.

5 More Apparel Stocks Displaying Earnings Momentum

On the lines of Lululemon, we have identified five more apparel stocks that have reported splendid earnings in the last reported quarter and raised outlook for the full year. These stocks are fundamentally strong and have displayed momentous growth of late.

PVH Corporation (NYSE:PVH) , which specializes in designing and marketing branded dress shirts, neckwear, sportswear, jeanswear, intimate apparel, swim products, footwear, handbags and other related products, is a good bet. The company has displayed a robust surprise trend with earnings topping estimates for 14 straight quarters and sales marking the fifth consecutive beat in third-quarter fiscal 2017. This is mainly backed by solid momentum at its premium Calvin Klein and Tommy Hilfiger brands. Driven by these factors as well as an improvement in foreign currency rates and a strong start to the holiday season, PVH Corp anticipates delivering robust revenues and earnings in fourth-quarter 2017. Moreover, the company raised guidance for fiscal 2017.

The company’s long-term expected earnings growth rate of 13.1% show potential. Moreover, the stock has gained 49.2% year to date, outperforming the industry’s 5.4% increase. The company currently has a Momentum Score of A and carries a Zacks Rank #2.

Another lucrative option is New York-based G-III Apparel Group, Ltd. (NASDAQ:GIII) . The company designs, manufactures and markets apparel for men and women. The company delivered its third consecutive earnings surprise in third-quarter fiscal 2018. Further, the company raised fiscal 2018 earnings view and provided encouraging fourth-quarter guidance. The stock has grown 13.9% in the last three months, outperforming the industry’s 5.7% upside. Moreover, the company has a long-term expected earnings growth rate of 15% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors can also count on Michael Kors Holdings Ltd. (NYSE:KORS) , a global luxury lifestyle company, founded by designer Michael Kors. The company delivered its 10th consecutive positive earnings surprise and third straight sales beat in the recently reported second-quarter fiscal 2018. This was driven by the company’s strategic endeavors including constantly deploying resources to expand product offerings, opening new stores, building shop-in-shops and upgrading e-commerce platform. Further, the company raised guidance for fiscal 2018 and provided views for the third quarter. The company currently has a Value Score of B and long-term expected earnings growth rate of 7.5%. Further, this Zacks Rank #2 stock has gained 42.2% in the last three months, outperforming the industry’s 5.6% growth.

We also suggest investing in Guess? Inc. (NYSE:GES) , which designs, markets, distributes and licenses casual apparel and accessories for men, women and children as per the American lifestyle and European fashion sensibilities. Third-quarter fiscal 2018 marked the company’s third consecutive earnings beat. The company is gaining from strength in Europe and Asia backed by store openings, positive comps and wholesale growth. Driven by these factors, management raised fiscal 2018 earnings view. The company currently has a long-term expected earnings growth rate of 17.5% and a Zacks Rank #2. Further, the stock has gained 40% year to date, outperforming the industry’s 5.4% growth.

Last but not the least, investors may consider premium lifestyle retailer Ralph Lauren Corp. (NYSE:RL) . The company delivered 11th consecutive earnings beat in second-quarter fiscal 2018. Apart from the company’s efforts to improve quality of sales by reducing promotions and markdowns, favorable foreign currency rates aided results. Looking ahead, we remain confident of Ralph Lauren’s performance based on its efforts related to global brand reorganization, constant infrastructural investments and e-commerce enhancements. Ralph Lauren provided outlook for the third quarter and raised operating margin guidance for fiscal 2018 to account for the recent positive movements in foreign currency rates. The stock has advanced 11.7% in the last three months, outperforming the industry’s 5.7% upside. Moreover, the company has a long-term expected earnings growth rate of 15% and sports a Zacks Rank #1.

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lululemon athletica inc. (LULU): Free Stock Analysis Report

Ralph Lauren Corporation (RL): Free Stock Analysis Report

Guess?, Inc. (GES): Free Stock Analysis Report

PVH Corp. (PVH): Free Stock Analysis Report

G-III Apparel Group, LTD. (GIII): Free Stock Analysis Report

Michael Kors Holdings Limited (KORS): Free Stock Analysis Report

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