Big Brand Name Clothes Moving Apparel Stocks

 | Nov 02, 2012 | 11:00 AM EDT  | Comments
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When Wednesday's session wrapped up, some of the day's best heavy-volume gainers showed a clear connection to Sandy. Generator maker Generac (GNRC) gapped up 20% in monster volume, closing at $34, a new high.

But there were some less obvious stocks making big moves in heavy volume. The apparel industry has been a growth stalwart since major indices emerged from the bear in March of 2009.

The industry grabbed headlines Wednesday because of PVH's (PVH) $2.9 billion acquisition of underwear maker Warnaco (WRC). (OK, Warnaco also distributes Calvin Klein jeans and Speedo swim wear, but it's just more fun to describe the company in terms of its core product.)

Both stocks bolted to new highs on the news. It's not unusual to see the company being acquired race higher on deal news, but this is one of those more rare cases where the buyer also gained.

The news sent me to some screens for top apparel makers -- something I hadn't really checked since the market downturn began. But because the industry performed so well over the past few years, these particular screens have frequently been my "go to" source of ideas.

I've written many times about a leader from that industry, Michael Kors (KORS). Not only is the company smack dab in the middle of a growth phase, but I personally enjoy seeing the namesake designer as a "Project Runway" judge. And yes, the company did get some prominent product placement in the latest season on Bravo.

The show used the company's flagship store on Madison Avenue, but much of the growth is overseas.

Analysts see income growing by 72% in fiscal 2013, to $1.46 per share, and 29% in fiscal 2014, to $1.88 per share.

Kors reports its 2013 second quarter on Nov. 13, with Wall Street eyeing 40 cents per share on revenue of $519.31 million. Those would be significant gains from the year-ago quarter.

The stock has held up better than major indices during the wider market correction.  It's been getting support along its 10-week average since mid-September, hitting resistance between $57 and $58.

The stock advanced 0.4% Wednesday, but volume was lower. It was trading higher again Thursday.

Kors, which boasts growth that outpaces fellow luxury goods retailer Coach (COH), is on the line between mid-cap and large cap. The stock has good liquidity, moving more than 3 million shares per day.

From the small-cap world, G-III Apparel Group (GIII), another clothing company with a strong chart and decent earnings estimates. It gained 3.6% Thursday in above-average turnover.

This company is another Calvin Klein licensee. Its brand portfolio includes Guess, Dockers, Tommy Hilfiger, Levi's and Sean John, among others. It also has licenses from major sports leagues. 

The stock is trading below its April 2011 high of $45.38. It rallied to a 52-week high of $39.50 on Oct. 19, then pulled back to find 50-day support.

The fundamental picture has been less than stellar, with erratic earnings and revenue growth performance over the past two years. In fiscal 2013, analysts expect earnings-per-share of $2.83, up 15%. That's expected to grow another 14% in 2014, to $3.22 per share.

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