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Anatomy of Success: G-III Apparel (GIII)

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Discovering which stocks are best positioned to see their price increase is surely a daunting task, but by utilizing a tool like the Zacks Rank, it becomes much easier, and much more profitable.

Stocks with a #1 (Strong Buy) ranking have a long history of outperforming the markets over a one-to-three-month time period, and it’s important to note that only 5% of the Zacks Rank universe receives this unique grade. Not only does this ranking system help identify the most elite companies, but it also enables people to hold a certain security while it continues to gain in value beyond the three-month investment horizon.

Below is an example that demonstrates how an investor could have used the Zacks Rank to find a stock that was just beginning to see accelerated price appreciation. And by following this ranking methodology, they could have held the stock while it beat estimates and raised its outlook during three quarters since September.

G-III Apparel Group (GIII - Free Report)

Headquartered in New York City, G-III is a leading manufacturer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. Its large portfolio includes Donna Karan, DKNY, Vilebrequin, G. H. Bass, Andrew Marc, Marc New York, Eliza J and Jessica Howard. G-III has fashion licenses under the Calvin Klein, Tommy Hilfiger, Karl Lagerfeld, Kenneth Cole, Cole Haan, Guess? Vince Camuto, Ivanka Trump, Kensie, Jessica Simpson, Levi's and Dockers brands.

GIII was first added to the Zacks Rank #1 (Strong Buy) list after it reported its fiscal 2018 second quarter results. Earnings of a loss of 15 cents per share topped the Zacks Consensus of a loss of 22 cents, while revenues of $538 million increased over 20% year-over-year. As a result, G-III upped its prior guidance for the fiscal year thanks to great wholesale revenues across all of its major brands, as well as a strong order book for the upcoming fall and holiday seasons. At the closing bell on September 8, shares of the retailer closed at $29.29.

The company kept up this Strong Buy run until well into November and given the #1 title once again on December 8 due to a strong third quarter performance. Both earnings and revenues beat the Zacks Consensus, and improved in comparison to the prior year quarter; net sales grew 16% year-over-year. G-III increased its outlook for the year once again, noting its strong wholesale performance and solid growth strategy in place. About four months after first hitting the top of the Zacks Rank, GIII closed up nearly 19% to $34.84 per share.

GIII was added to the Strong Buy list a third time on June 8 after impressive fiscal 2019 first quarter results. Earnings of 22 cents per share soared past our consensus of a loss of cents per share, with revenues of $612 million jumping 16% year-over-year. Following in the trend of past quarters, the company increased its full-year sales and net income outlook, and is committed to capturing market share and improving its overall profitability. Ten months after its first Strong Buy listing, GIII shares have increased well over 67% to $49.02. GIII stock is still a #1 (Strong Buy) on the Zacks rank, and shares have risen over 90% in the past one-year period.

This table shows the price performance of GIII (in red), as well as the 12-month forward looking EPS estimate (in green) from the time the stock first earned a Zacks Rank #1 (Strong Buy). During this stretch, GIII never moved lower than a Zacks Rank #3 (Hold).

By utilizing the Zacks Rank, investors are able to easily identify elite stocks that are best positioned to beat the market on a consistent basis, and how to hold those top stocks as they continue to grow.

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