Despite high inflation, logistical disruption, and concerns with omicron coronavirus variants, the U.S. manufacturing industry as a whole has seen impressive growth in recent times. According to the Institute for Supply Management, the the manufacturing activity index increased to 61.1 in November. The increase in consumer spending has contributed to the growth of the clothing manufacturing industry.
According to data from the Department of Commerce, the United States consumer spending rose 0.6% in November. Consumer confidence also remained strong in December. The final reading of the Consumer Confidence Index compiled by the University of Michigan stood at 70.6 for December, down from 67.4 in November. According to Statista, the income of the clothing market should be $ 317.56 billion in 2021.
Against this backdrop, the fundamentally sound clothing manufacturing stocks Levi Strauss & Co. (LEVI) and Kontoor Brands, Inc. (KTB) could be solid additions to your watchlist. Wall Street analysts expect them to recover by more than 45% in the near term.
Levi Strauss & Co. (LEVI)
LEVI is a clothing and related accessories company for men, women and children in the United States, Europe and Asia. The company operates approximately 3,100 stores and shop-in-shops dedicated to the brand.
On October 6, 2021, Harmit Singh, Chief Financial Officer of the company, said, “Going forward, we are raising our prospects in terms of revenues and profits. We have taken pricing action and believe we have pricing power to ease inflationary pressures. “
LEVI’s net revenues were $ 1.50 billion for the fiscal third quarter ended August 29, 2021, up 40.9% year-over-year. The company’s net profit was $ 193.33 million, up 614.8% year-on-year. Its EPS rose 571.4% year-on-year to $ 0.47. In addition, its fit BAII was $ 221.80 million, up 163.4% year-over-year.
For fiscal 2021, analysts expect LEVI’s revenue to rise to $ 5.76 billion, a 29.3% year-over-year increase. In addition, the company’s EPS is expected to increase 585.7% year-on-year to $ 1.44 in the current year. It has exceeded BPA estimates in each of the past four quarters.
Over the past year, the stock has gained 26.3% to close yesterday’s trading session at $ 25.03. Wall Street analysts expect the stock to hit $ 37.25 in the near term, indicating a upside potential of 48.8%.
LEVI’s POWR ratings reflect this promising outlook. The stock has an overall rating of B, which is equivalent to a purchase in our POWR odds system. POWR ratings assess stocks based on 118 different factors, each with its own weight.
Additionally, the stock has an A rating for growth and sentiment and a B rating for momentum and quality. It is ranked # 3 in the Consumer goods industry. Click on here to see additional POWR ratings for value and stability for LEVI.
Kontoor Brands, Inc. (KTB)
KTB is a lifestyle apparel company engaged in the design, manufacture, purchase, marketing and distribution of apparel under the Wrangler and Lee brands in the United States and globally. It operates approximately 86 retail stores around the world.
On November 4, 2021, Scott Baxter, President and CEO of KTB, said: “Kontoor is uniquely positioned to win in the market, as evidenced by another quarter of its strength across segments, channels and regions. And we expect our momentum to continue, as evidenced by our upward guidance for the year. Our strategic investments in key enablers that strengthen TSR such as digital, demand creation and people are expected to fuel our accelerating fundamentals. “
KTB’s net income increased 11.8% year-on-year to $ 652.3 million for the third quarter ended September 30, 2021. Its net income was $ 63.41 million, up 4.3% year-on-year. Additionally, its EPS stood at $ 1.07 from $ 1.05 during the period last year.
Analysts expect KTB’s revenue to grow 18.4 percent year-on-year to $ 2.48 billion in fiscal 2021. Likewise, its EPS is expected to increase by 62, 1% year-on-year for the current year to reach $ 4.23. It has also beaten EPS estimates in each of the past four quarters.
Over the past year, the stock has gained 25.8% to close yesterday’s trading session at $ 51.62. Wall Street analysts expect the stock to hit $ 86 in the near term, indicating a upside potential of 66.6%.
It’s no surprise that KTB has an overall rating of B, which equates to a Buy in our proprietary rating system. Plus, it has a B rating for value, momentum, and quality. KTB is ranked # 27 out of 63 stocks in the A-Rated Fashion & Luxury industry. Click on here to see additional POWR ratings for KTB (Growth, Stability & Sentiment).
LEVI stock was trading at $ 25.18 per share on Thursday afternoon, up $ 0.15 (+ 0.60%). Year-to-date, LEVI has gained 26.67%, compared to 29.47% for the benchmark S&P 500 during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist passionate about the analysis of financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentary. Following…