Hanesbrands, Inc. (HBI)

Headquartered in Winston-Salem, NC, Hanesbrands Inc. (HBI - Analyst Report) is a manufacturer and marketer of innerwear, outerwear, and hosiery apparel, which are sold under the brand names of Hanes, Champion, Playtex, Bali, Just My Size, Barely There, L eggs, Outer Banks, and Wonderbra.

Management's business model requires only modest sales growth to create substantial EPS growth. Earnings are being driven by brand building and cost-reduction initiatives. Since the spin-off in September 2006, the company has reduced debt by $511 million, lowering interest expense from the post spin-off financial structure.

However, management is reporting non-GAAP EPS, which excludes unusual actions, which may be distorting perceived earnings. The Buy rating is maintained due to valuation.