Saturday, October 27, 2012

Are Clothing Stocks Dressed for Success?

With the exception of nudists and streakers, people will always wear clothing. And with the holiday season coming up, investors are taking a closer look at apparel and clothing companies. With consumer confidence the highest it's ever been in the last five years, based on the recent Thomson Reuters/University of Michigan survey, the future may bode well for these stocks.

According to the free list of apparel and clothing stocks at, there are over 25 companies in this sector, with ten paying dividends, ranging from 0.2% to 5.5%.

If you like low priced stocks, American Apparel (APP) trades close to a dollar a share. This Los Angeles based vertically integrated company makes and markets branded apparel for women, men, children, and babies, including T-shirts, sweaters, and jackets, and operates over 285 retail stores in 20 countries. It operates the largest garment factory in the United States, with the knitting, dyeing, cutting, sewing, photography, marketing, distribution and design taking place in the company's facilities in Los Angeles.

Total net sales for the quarter ending September 30, 2012, rose by an estimated 15% to $162.6 million, and comparable retail and online sales spiked by an estimated 21%. The company's official earnings announcement is scheduled for November 8.

The stock has an extremely favorable price to sales ratio of 0.21. (Remember, the lower the P/S ratio, the better. Under 1 is good, over 2 is not so good.)

American Apparel is known for its innovative advertising and marketing. As a matter of fact, Ryan Holiday is the director of marketing for the company. He's the author of the book Trust Me, I'm Lying: Confessions of a Media Manipulator, a must read for anyone who ever goes on the Internet, which is basically ... everyone. (I will be publishing a book review about it in the next few days.)

For investors who like income, Columbia Sportswear Company (COLM) pays a CD beating annual yield of 1.6%, with dividends paid quarterly. This Portland, Oregon based company designs and sells outdoor apparel, footwear, and accessories. The company's brands include Columbia, Mountain Hardwear, Sorel, and Montrail. It operates retail stores in the United States, Canada, western Europe, Japan, and Korea.

The stock trades at 19.6 times trailing earnings. Revenues for the latest reported quarter ending September 30 were down slightly, dropping 3.8%. The price sales ratio is 1.07. Annual dividend payouts of $29.8 million are easily covered by an operating cash flow of $95.25 million.

To see a free list of clothing and apparel companies, which can be downloaded and sorted, go to

Disclosure: Author didn't own any of the above at the time the article was written.


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