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5 Apparel Stocks to Buy as Restrictions Get Relaxed Further

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The clothing and apparel sector had taken a bad hit last year as fewer people bought new garments because they mostly stayed indoors. However, the apparel market started showing signs of recovery as the economy reopened and restrictions slowly got lifted.

Now that restrictions have been eased further with the ban on traveling and holidaying being eased last week by the government, it is likely that people will be going out more. This is likely to lead more people to buy new clothes and provide a boost to the industry.

Apparel Sales Jump YoY

Although retail sales came in flat year over year in April, sales of apparel soared. According to the Commerce Department, sales at clothing and clothing accessory stores surged 726.8% year over year in April. The National Retail Federation’s (NRF) figures don’t vary much from the Commerce Department. According to the NRF, sales at clothing and clothing accessory stores jumped 726.8% on a year over year in April.

The jump comes as no surprise as last year saw most stores closed during this time following the coronavirus outbreak. Moreover, people mostly stayed indoors and didn’t spend much on clothing and clothing accessories. This started changing once the economy started reopening in June although it wasn’t until the fourth quarter of 2020 when people started spending on buying clothes.

Apparel Market Poised to Grow

The spending on clothes started picking up as the vaccination drive gathered steam, which was earlier this year. As cases of new COVID-19 infections and deaths declined and more people got vaccinated, they felt more confident about stepping out of their homes. This gave the much-required push to apparel sales. Moreover, the second round of stimulus checks started reaching people by the end of February, which gave them more spending power, thus helping the apparel market.

The industry is going to be further benefited in the coming days from easing restrictions. Last week, the government said that fully vaccinated adults would no longer be required to wear masks outdoors. Also, a negative COVID-19 test report before flying will no longer be mandatory. This is likely to give people more confidence as they step out of their homes now. Also, after a year of almost no outdoor activity, many are likely to plan trips and holidays, which will require them to buy clothes.

Our Choices

Given this scenario, it would be prudent to invest in these five apparel stocks. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie & Fitch Company (ANF - Free Report) operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 8.8% over the past 60 days. The company sports a Zacks Rank #1.

Levi Strauss & Co. (LEVI - Free Report) designs and markets jeans, casual wear and related accessories for men, women and children under the Levi's, Dockers, Signature by Levi Strauss & Co. and Denizen brands. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 14.4% over the past 60 days. Levi Strauss sports a Zacks Rank #1.

American Eagle Outfitters, Inc. (AEO - Free Report) is a specialty retailer of casual apparel, accessories and footwear for men and women aged 15-25 years.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 22.6% over the past 60 days. American Eagle Outfitterscarries a Zacks Rank #2.

Citi Trends, Inc. (CTRN - Free Report) is a value-priced retailer of urban fashion apparel and accessories for the entire family. The company currently operates stores located in the South, Southeast and Mid-Atlantic region.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 73.7% over the past 60 days. Citi Trendshas a Zacks Rank #1.

L Brands, Inc. evolved from an apparel-based specialty retailer to a segment leader focused on women’s intimate and other apparel, personal care, beauty and home fragrance products. 

The company’s expected earnings growth rate for the current year is 56.7%. The Zacks Consensus Estimate for current-year earnings has improved 29.7% over the past 60 days. L Brands has a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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