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Luxury Apparel Stocks Tapping into Growing Consumer Confidence

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Luxury apparel stocks are leveraging the rising confidence among affluent individuals, positioning themselves for potentially lucrative returns in the foreseeable future. According to Fortune Business Insights, the global revenue of the luxury apparel sector is expected to surge from $63 billion in 2023 to an impressive $93.1 billion by 2030, marking a noteworthy compound annual growth rate of 5.74%. This upswing is fueled by the unwavering spending habits of wealthier demographics – a segment that doesn’t foresee economic conditions affecting their fashion expenditures. Even during economic downturns, these fashionable luxury stocks have the potential to outshine broader market performance. Bolstering this trend is the burgeoning confidence in the American economy among individuals earning $100,000 or more annually. As this demographic’s sentiment towards the economy improves, their outlays on luxury apparel are poised to surge, further propelled by the recent bullish surge in the stock market. Here are three upscale apparel stocks that savvy investors should consider to capitalize on these favorable market dynamics.

Birkenstock (BIRK)

Birkenstock (BIRK) is a German producer of footwear established in 1774.

German footwear manufacturer Birkenstock (NYSE:BIRK) has delivered robust financial performance in 2023, with its top-line soaring 20% to 1.49 billion euros, excluding currency fluctuations, and EBITDA (earnings before interest, taxes, depreciation, and amortization), excluding certain items, advancing 11% to 483 million euros. Notably, the company’s cash flows from operating activities surged an impressive 53% to 359 million euros.

Furthermore, Birkenstock holds substantial growth opportunities in Asian territories, where it presently has limited presence, with only around 10% of its revenue originating from the vast region. The company is actively looking to expand its revenue streams from major Asian markets this year, as per a report by Seeking Alpha columnist Gary Alexander.

Analysts, on average, anticipate the company’s earnings per share to reach $1.34 in the current year and rise to $1.74 in 2025, marking an increase from $1.22 in 2023.

Lululemon (LULU)

A close-up picture of the Lululemon (LULU) sign in the Hong Kong airport.

In a positive Q4 pre-announcement on January 6th, yoga apparel manufacturer Lululemon (NASDAQ:LULU) revised its sales guidance upwards from $3.170 billion to $3.190 billion, from the previous range of $3.135 billion to $3.17 billion. The company now anticipates a notable 14-15% increase in its revenue for the last quarter compared to the same period in the previous year. Lululemon also raised its Q4 earnings per share estimate from $4.85-$4.93 to $4.96-$5.

According to Investor’s Business Daily, LULU stock carries a high 98 Composite Rating out of a possible 99. Moreover, prominent financial institutions such as Goldman Sachs and JPMorgan have raised their price targets on Lululemon shares to $513 and $500, respectively, subsequent to the company’s Q3 earnings report.

On average, analysts expect Lululemon’s earnings per share to climb to $12.47 in 2024 from $10.07 in 2023, indicating strong growth potential. With LULU’s forward price-earnings ratio standing at 31.45 times, the stock appears attractively positioned.

Ralph Lauren (RL)

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