7 Top Apparel & Footwear Stocks for Your Holiday Shopping List

Consumers have spent record amounts in recent days shopping for holiday bargains, with strong showings for footwear and apparel. Several leading investment experts and MoneyShow.com contributors suggest some retail ideas -- from boots to sneakers and jackets to jeans -- that you might consider for your portfolio. Doug Gerlach, Small Cap Informer Founded in 1978, Boot Barn Holdings is the largest and fastest-growing lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the U.S. It offers a wide selection of work and lifestyle brands through 232 stores in 31 states. Stores are located in the West, South and Midwest U.S., with a heavy concentration in Texas. Boot Barn also operates several e-commerce channels, selling to customers who live a country lifestyle. Typically, western wear makes up 70% of sales, while work wear comprises 30%. Footwear comprises 53% of the company's total product sales mix, and 63% of customers are men. Management sees work wear and western wear as making up a $20 billion market opportunity, and one that is highly-fragmented and less fashion-driven than traditional apparel. Country music, western events, ranching, horse ownership, and agriculture are all driving western wear growth, while blue collar employment trends drive work wear growth. Boot Barn could reach 300 stores before it would have to worry about locations cannibalizing each other. Its current store count is more than 2.5 times as many stores as their closest competitor. The company is opportunistic and purchases independently owned stores when possible, then rebranding them as Boot Barn operations. We project sales and earnings growth at 14% annually through fiscal 2022 (fiscal years end in March). Wall Street analysts are looking for 16%-25% annual EPS growth over the next five years, so our projections could be conservative. Boot Barn's pre-tax profit margins have been generally expanding, reaching 4.6% at the end of fiscal 2017. There is plenty of room for continued expansion of the margins here, so we hope the upward trend continues. The recent turndown in the stock price (along with many other stocks) has put Boot Barn solidly in buy territory. With a selected high P/E of 20 and five-year projected EPS of $2.64, the stock could reach $53. On the downside, a retreat to a low P/E of 8 multiplied by trailing 12-month EPS of $1.37 would deliver a low price of $11. The upside-to-downside ratio is 4.1 to 1 and the projected annual total return is 22.4%. Crista Huff, Cabot Undervalued Stocks Advisor Skechers USA Inc. is an apparel company that designs and manufactures stylish, affordable footwear for people of all ages, with a presence in 170 countries. Skechers is the third largest footwear brand globally, behind Nike and Adidas , and a U.S. market leader in several footwear categories, including walk, work, casual dress and casual lifestyle. Skechers recently reported third-quarter diluted EPS of $0.58, above all analysts' estimates, and record sales of $1.176 billion. The company continues to pursue significant expansion via a global retail network and e-commerce. International revenue is growing dramatically, currently representing 55.5% of total quarterly revenue, with an expectation of achieving $1 billion in revenue in China in a few short years. During the quarterly conference call, management commented that if U.S. tariffs on footwear emerge, the company is prepared to shift production to non-tariff countries, and also to capture market share from their higher-priced competitors. Management also raised their sales and net income guidance for the fourth quarter. The company has bought $40 million of its own stock during the quarter, with $92 million remaining in the share repurchase authorization. Traders should buy now. Steve Mauzy, High Yield Wealth A lot of dividend cash flows at this time of year; indeed, VF Corp. has been imbued with the holiday spirit and will pay a generous dividend with the next payment. The maker of Vans, Timberland, and Lee and Wrangler jeans, increased its quarterly dividend by 10.9%. The quarterly dividend will be paid at $0.51 per share going into 2019. VF Corp. is a legitimate dividend aristocrat. The shares yield 2.6%, a respectable yield compared with the overall market. The company has increased its dividend every year for the past 45 years. And as the dividend goes, so goes the share price. The stock has been a recommendation in our portfolio since December 2016. Its shares are up 39% over the past two years. They were up more before the recent stock market selloff, but we're confident they will reclaim that ground lost, and then climb higher. John Buckingham, The Prudent Speculator Shares of Foot Locker were positively impacted by the company's third-quarter fiscal 2019 (ending January) financial results. The footwear and apparel retailer reported adjusted EPS of $0.95, versus expectations of $0.92, on revenue of $1.86 billion (vs. forecasts of $1.84 billion). Foot Locker said that comparable store sales expanded 2.9% and gross margins increased by 60 basis points. All in all, we saw it as a positive quarter as the company continues to operate through a challenging athletic environment. Foot Locker spent $108 million to buy back 2.2 million shares during the quarter, yet the company reported $748 million of cash on its balance sheet, with only $124 million of debt (a net cash per share position of approximately $5.43). We believe Foot Locker needs to continue to invest in staff that can improve the in-store experience and in its digital presence, which can pay long-term dividends. The company's solid cash position, growing online presence and inventory management give us plenty of reasons to hold the stock. All things considered, our target price has been edged up to $79 per share. Mike Cintolo, Cabot Top Ten Trader Everybody knows Crocs , the distinctive (some would say ugly) plastic footwear beloved of children and beach-going adults. The company makes clogs, sandals, flip-flops, slides, shoes and boots, all using its proprietary Croslite resin material. After four years of flat or negative revenue growth from 2014 through 2017 (including earnings losses in 2015 and 2016), the company has ridden a rebound that started in the Q4 2017 to four straight quarters of mid-single-digit growth. The earnings picture is much stronger, with nine straight quarters of growth and three quarters in 2018 with positive results, including 15% in Q1, 30% in Q2 and 250% in Q3. The shoes are still ugly, but management has gotten the company growing again, and analysts are forecasting 119% earnings growth this year and 134% in 2019. In raising its guidance for the rest of 2018, management cited a greater reliance on e-commerce as a catalyst for continuing growth. It looks like having a footwear product that's lightweight, won't mark up your floors, loves the water and won't get stinky is the right thing right now. Canada Goose is a newer, high-end apparel brand (mostly durable winter wear that's both stylish and functional) that's branching out into a few new areas, executing brilliantly and driving massive, estimate-beating growth along the way. Numbers-wise, the latest quarter was a blowout, with local currency sales (up 34%), EBITDA (up 53%) and earnings per share (up 59%) easily topping expectations, leading management to hike expectations for the current fiscal year ending in March. Wholesale revenues did very well (up 18%), but it is Goose's move into e-commerce and the opening of its own retail stores that is boosting growth, with direct-to-consumer revenue up around 150% and making up 22% of revenues. Beyond its signature jackets, winter hats, scarfs and the like, the company has moved into springwear and knitwear, and its purchase of Baffin earlier this month, has moved into the performance outdoor (hunting, hiking, camping, snowshoeing, etc.) footwear category as well. Throw in increased margins and some commentary about its increasing penetration in China, and big investors snapped up shares after the report. We like the story. Bill Matthews, The Cheap Investor Big 5 Sporting Goods is a leading sporting goods retailer in the western United States, operating 436 stores under the Big 5 Sporting Goods name as of the fiscal quarter ended Sept. 30, 2018. It provides a full-line product offering in a traditional sporting goods store format that averages 11,000 square feet. Big 5's product mix includes athletic shoes, apparel and accessories. It sells private label merchandise under its own trademarks comprising Golden Bear, Harsh, Pacifica and Rugged Exposure; and licensed trademarks, including Beach Feet, Bearpaw, Body Glove, Morrow and The Realm. The company declared a quarterly cash dividend of $0.05 per share of outstanding common stock, which will be paid on Dec. 14, 2018, to stockholders of record as of Nov. 30, 2018. This dividend, which represents a reduction from the previous quarterly cash dividend rate of $0.15 per share, reflects the company's intent to utilize capital to maintain a healthy financial condition. For the fiscal 2018 fourth quarter, Big 5 expects same-store sales to be in the range of negative low single-digits to positive low single-digits and expects to realize a loss per share in the range of $0.15 to $0.25. During the third quarter of fiscal 2018, the company opened one store. It plans to open an additional store during the fiscal 2018 fourth quarter. For the fiscal 2018 full year, it anticipates opening four new stores and closing two stores. We would consider purchasing shares if the price fell to $3.40 or below.

7 Top Apparel & Footwear Stocks for Your Holiday Shopping List

From boots to sneakers and jackets to jeans, leading investment pros offer their retail choices for your portfolio.

Columnist Conversation

This Weekend on Real Money

Where Does the Nasdaq Go From Here?

Has the Short-Term Top Come for the XLF/Banks?

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.