"Fashion is not something that exists in dresses only. Fashion is in the sky, in the street, fashion has to do with ideas, the way we live, what is happening." - Coco Chanel
The legendary fashionista was right. Clothes make not only the man (or woman), but are also huge business. Given its large spectrum, the fashion universe cannot be defined as a specific sector or industry. The space houses various textile and apparel brands, retailers, importers and wholesalers, who are helping the masses in making a style statement.
Focusing primarily on what people wear, we would restrict our discussion to retailers dealing in clothing, footwear, cosmetics and accessories, among others.
The wide retail industry ranks among the dominant U.S. industries, from the growth perspective, and also employs an enormous workforce. Retail sales represent nearly 30% of consumer spending, which itself accounts for more than two-thirds of the economy.
Catching a glimpse of the latest data - per the U.S. Department of Commerce - advanced estimates of retail and food services sales in August 2015 rose 0.2% and 2.2% on a sequential and yearly basis, respectively. Further, sales over June-Aug 2015 climbed 2.2%, making us optimistic about the retail industry's performance in the upcoming quarter.
So what's behind all the bling? Well, remember that change is the only constant in fashion. Since people look for a new clothing line every season, they actually end up driving demand. And because clothes are a necessity, this industry is never really out of style.
On analyzing how significant the space is for investors, we note that the fashion industry holds immense opportunity. Even in shaky markets, one can trend up the profit ladder by adding some in-vogue industry players to the portfolio. Now, one doesn't need a stylist to do that. All that an investor has to do is to go with the flow.
Style Up Your Portfolio
When it comes to fashion or trade, American Eagle Outfitters, Inc. AEO is a trendsetter.
Add this Zacks Rank #2 (Buy) stock, which has jumped over 20% year to date, to your portfolio. Also, the company's current year estimates show an increase of nearly 6.3% to average $1.02 per share over the past 60 days. Moreover, this Pittsburgh, PA-based retailer flaunts a nice streak of earnings beats, with an average of 15.9% in the last four quarters.
American Eagle engages in the designing and marketing of casual clothing, along with its subsidiaries. It houses a wide assortment of jeans, cargo pants, graphic T-shirts as well as a range of accessories, outerwear and footwear.
Speaking of footwear, take a look at Skechers USA Inc. SKX to team up your apparel with the perfect pair of shoes. Skechers designs, develops, markets and distributes footwear for men, women and children in the United States and overseas under the SKECHERS name, as well as under several uniquely branded names.
Sporting a Zacks Rank #1 (Strong Buy), the company's earnings have outperformed the Zacks Consensus Estimate by an average of 20.2% over the past four quarters. Also, with estimates rising about 14.5% to $4.97 over the past 60 days, Skechers' stock price has seen an impressive year-to-date rise of nearly 156%.
Skechers has been treading steadily with its offering of stylish and casual shoes at compelling prices. Add this Manhattan Beach, CA-based company to your portfolio to walk in style.
But how many of us really walk into shops when we literally carry stores in our pockets? The popularity of ecommerce has revolutionized online buying and created giants like Amazon.com Inc. AMZN , which lug along attractive deals. This leading online retailer's current year earnings estimates have shot up significantly to $1.52 per share, over the past 60 days.
Nothing can keep you away from this Zacks Rank #1 stock, which has surged 73.8% year to date, having crushed the earnings estimates by 72.9% over the last four quarters.
Fashion isn't complete without a makeover. ULTA Salon, Cosmetics & Fragrance, Inc. ULTA - a leading beauty retailer that provides one-stop shopping for prestige, mass and salon products and salon services in the United States - makes the most of this very fashion mantra.
This Zacks Rank #2 stock has a strong earnings history, reflected by its average earnings surprise of 8.1% over the past four quarters. Its current year estimate revisions and a 32.5% hike in stock price further underscore the company's solid performance. A relaxing experience at this Bolingbrook, IL-based salon is likely to add gains to your portfolio.
Invest in Fashion
Everyone, from student to a Wall Street analyst, wants to be in style. Why not invest in these stocks and make your portfolio stylish too? With all fashion mantras ticked off on the checklist, your portfolio should see gains ramp up.