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Forget Naked Brand Group, Buy These 3 Intimate Apparel Stocks Instead

Naked Brand Group (NAKD) has become somewhat of a cult stock as many traders on Reddit's WSB believe it has significant upside. The POWR Rating disagrees as it has a D grade. However, the Reddit traders are certainly correct that apparel sales should continue rising after being depressed for more than a year. Instead of rolling with the overhyped NAKD, consider the rest of the players in the space.  Below, we provide a look at three of those stocks in Hanes Brands (HBI), L Brands (LB), and Gildan Activewear (GIL).

Naked Brand Group (NAKD) has become somewhat of a cult stock as many traders on Reddit's WSB believe it has significant upside. The POWR Rating disagrees as it has a D grade.

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However, the Reddit traders are certainly correct that apparel sales should continue rising after being depressed for more than a year.&nbspInstead of rolling with the overhyped NAKD, consider the rest of the players in the space.  Below, we provide a look at three of those stocks in Hanes Brands (HBI), L Brands (LB), and Gildan Activewear (GIL).
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HBIBased in Winston-Salem, North Carolina, HBI designs, makes and sells underwear and additional apparel for men, women, and kids. Examples of HBI product lines include Hanes, Playtex, Wonderbra, Barely There, Just My Size, and Bali. HBI’s innerwear segment raked in nearly 45% of the company’s revenue in ’20.

HBI has a B POWR Rating grade. The stock has Bs in the Momentum and Value components of the POWR Ratings. HBI also has C grades in the Growth and Quality components of the POWR Ratings. You can find out how HBI fares in the rest of the POWR Ratings components such as Sentiment and Stability by clicking here.

Of the 66 stocks in the Fashion & Luxury segment, HBI is ranked 30th. Investors who would like to learn more about the stocks in this space can do exactly that by clicking here.

The analysts are pounding the table in favor of HBI, setting an average target price of $21.45. If HBI hits this price target, it will have climbed by nearly 17%. The highest analyst price target for the stock is $27. Of the 10 analysts to have issued HBI recommendations, one views the stock as a Strong Buy, six view it as a Buy, and three views it as a Hold.

HBI has a relatively low forward P/E ratio of 11.72 even though it is trading closer to its 52-week high of $22.82 than its 52-week low of $12.28. HBI has a beta of 1.51 so it is likely to hold most of its value should the market tank.

LB

LB has pivoted from an apparel specialty retailer to a segment dominator with a focus on women’s intimate apparel, beauty products, personal care items, and fragrances used in the home. Based in Columbus, Ohio, LB sells merchandise in nearly half a dozen countries. LB items are sold in malls, online, through catalogs, and additional channels.

LB’s Bath & Bodyworks business pulled in 54% of the company’s fiscal year 2020 net sales. The remainder of LB’s sales stems from its Victoria’s Secret line. Victoria's Secret recently started trading under its own stock ticker symbol of VSCO.

LB has a B POWR Rating grade. The stock has A grades in the Quality and Growth components of the POWR Ratings. LB has Cs in the Value and Momentum components. You can find out how the stock fares in the Sentiment and Stability components by clicking here.

Of the 66 stocks in the Fashion & Luxury space, LB is ranked 15th. Click here to learn more about the stocks in this space. L's forward P/E ratio of 12.88 and beta of 1.75 are both reasonable figures that should not give investors pause.

The analysts believe LB will trade around their average target price of $78.11. However, the highest analyst target price for the stock is a whopping $104. LB's average analyst price target has increased more than $47 in the previous 44 weeks.

GIL

GIL is a manufacturer and marketer of activewear in the activewear segment of the apparel market. Gil’s 100% cotton shirts, high-quality sweatshirts, and unique styles have legitimate mass appeal. GIL has a forward P/E ratio of 18.74. This figure is slightly high yet it should not be a deal-breaker for investors. GIL's beta of 1.58 indicates the stock probably won't significantly fluctuate if the market gets wonky.

GIL has a B POWR Rating grade, meaning it is a Buy. The stock has an A Sentiment component grade along with Bs in the Momentum and Growth components. Investors who are curious as to how GIL fares in the Value, Quality, and Stability components of the POWR Ratings can find out by clicking here.

Of the 35 stocks in the Athletics & Recreation space, GIL is ranked 21st. You can learn more about this segment by clicking here.

The top analysts have established an average target price of $40.15 for the stock. This target price indicates GIL has 18.61% upside potential. The analysts' average price target for the stock has increased by $24.29 in the prior 14 months. Of the 12 analysts to provide GIl recommendations, one considers the stock a Strong Buy, 10 consider it a Buy and one considers it a Hold.


NAKD shares fell $0.01 (-2.53%) in premarket trading Wednesday. Year-to-date, NAKD has gained 181.25%, versus a 18.30% rise in the benchmark S&P 500 index during the same period.



About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.

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