Back to top

Image: Bigstock

Apparel Sales Jump in November: 5 Stocks to Buy

Read MoreHide Full Article

Per the National Retail Federation (NRF), U.S. apparel sales grew 0.7% in November. The increase came on the back of robust sales both in-store and online. This definitely is turning out to be a great year for retailers, with holiday retail sales too increasing at its fastest pace in six years.

Understandably, an increasing number of Americans have been spending more this holiday season, which has been benefiting retailers. According to Mastercard SpendingPulse, shoppers spent more than $850 billion this holiday season. At the same time, it also proves the strength in the U.S. economy amid growing concerns of slowing global economic growth. Given this scenario, investing in apparel stocks looks like a profitable option.

Apparel Sales Jump in November

Per the NRF, November apparel sales were up 0.7% seasonally adjusted and 5.6% unadjusted year over year, with customers spending more during the first half of the holiday season. Sales at clothing and accessory stores increased 4.1% year over year. The increase was driven by robust online and other non-store sales. Online and other non-store sales grew 12.1% year over year and 2.1% month over month in November.

In-store sales too witnessed an impressive jump. Sales at general merchandise store grew 4.2% year over year and were up 0.4% month over month in November. Also, retail sales grew 0.2% in November, per the Commerce Department. It goes without saying that an increasing number of Americans are willing to spend more, which once again proves the underlying strength in the U.S. economy with unemployment hitting multi-year lows and higher wages and spending power.

Retailers Benefit From Record Holiday Retail Sales

It has been a great holiday season so far for U.S. retailers, with holiday retail sales growing at it fastest pace in six years. Excluding automobiles, holiday retail sales grew 5.1% between Nov 1 and Dec 24 compared with the year-ago period, per MastercardSpendingPulse, which tracks both online and in-store spending with all forms of payment.

Per the report, shoppers spent more than $850 billion this holiday season. The jump was driven by robust online spending. Online sales have been helping retailers this holiday season. Online sales grew 26.4% from a year earlier between the Wednesday before Thanksgiving through Black Friday, per Adobe Analytics. Per MastercardSpendingPulse, U.S. e-commerce sales grew 19.1% over 2017.

Our Choices

It goes without saying that an increasing number of Americans are willing to spend more on shopping. This has been steadily helping U.S. retailers, which has seen robust growth in apparel sales in November. At the same time, it also proves the underlying strength in the country’s economy despite a stock market swoon and a partial government shutdown.

Given this scenario, this is an opportune time to invest in apparel stocks. However, picking winning stocks may be difficult. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.

Abercrombie & Fitch Co. (ANF - Free Report) , through its subsidiaries, operates as a specialty retailer. The company operates in two segments, Hollister and Abercrombie. 

Abercrombie & Fitch sports a Zacks Rank #1 (Strong Buy). The company has expected earnings growth of 40% for the current year. The Zacks Consensus Estimate for the current year has improved 21.3% over the last 60 days.

Shoe Carnival, Inc. (SCVL - Free Report) offers a broad assortment of moderately priced dress, casual and athletic footwear for men, women and children with emphasis on national and regional name brands. 

The company has expected earnings growth of 59.7% for the current year. The stock sports a Zacks Rank #1. The Zacks Consensus Estimate for the current year has improved 10.2% over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boot Barn Holdings, Inc. (BOOT - Free Report)  operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. 

Boot Barn Holdings carries a Zacks Rank #1. The company has expected earnings growth of 78.6% for the current year. The Zacks Consensus Estimate for the current year has improved 0.8% over the last 60 days.

Canada Goose Holdings Inc. (GOOS - Free Report) is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. 

Canada Goose has a Zacks Rank #2 (Buy). The company has expected earnings growth of 43.9% for the current year. The Zacks Consensus Estimate for the current year has improved 10.5% over the last 60 days.

Urban Outfitters, Inc. (URBN - Free Report) is an innovative specialty retailer and wholesaler, which offers a variety of lifestyle merchandise to highly defined customer niches through Urban Retail stores in the United States, Canada and Europe.

Urban Outfitters has a Zacks Rank #2. The company has expected earnings growth of 63.5% for the current year. The Zacks Consensus Estimate for the current year has improved 2.6% over the last 60 days.

In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?

These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks>>

Published in