2 Athletic Apparel Stocks to Buy, 2 to Avoid
Athletic apparel stocks have outperformed as sales remained strong during the pandemic. However, these companies are maintaining momentum as recent ea...
Athletic apparel stocks have outperformed as sales remained strong during the pandemic. However, these companies are maintaining momentum as recent earnings reports continue to be strong. Patrick Ryan breaks down why investors should buy Under Armour (UAA) and Skechers U.S.A. (SKX) and avoid Lululemon Athletica (LULU) and Nike (NKE).
Let’s delve into two athletic apparel stocks to buy in Under Armour (UAA) and Skechers U.S.A. (SKX). We will also take a look at two stocks in the athletic apparel industry to avoid in Lululemon Athletica (LULU) and Nike (NKE).
UAA has been in business for 25 years. Based in Baltimore, Maryland, UAA is undeniably one of the athletic apparel industry leaders. Apparel represents nearly 70% of UAA revenue. Footwear constitutes 22% of company revenue. About 10% of UAA’s business stems from lifestyle products.
UAA has an elevated forward P/E ratio of 65.04. This is an indication it might be overvalued. However, UAA is still about $4 below its 52-week high of $26.45. UAA has a 52-week low of $9.63. The stock has a 1.28 beta. This is a sign UAA is unlikely to significantly waver should the market as a whole make a major downward or upwards move.
UAA has a B POWR Rating grade. The stock has Bs in the Quality, Momentum, and Growth components of the POWR Ratings. You can find out how UAA grades out in the Sentiment, Value, and Stability components by clicking here. Of the 35 stocks in the Athletics & Recreation space, UAA is ranked 23rd. Click here to find out more about the stocks in this space.
The analysts are adamant UAA will move higher. The average analyst price target for the stock is $25.58. If UAA rises to this price target, it will have achieved its upside potential of 26.45%.
SKX footwear is popular throughout the United States, Asia, Canada, the Middle East, Latin America, Europe, and beyond. All in all, SKX sells products in more than 170 countries. Nearly 4,000 SKX company-owned and third-party-owned stores are open.
SKX has a B POWR Rating. The stock has an A Sentiment component grade along with Bs in the Momentum and Growth components. Click here to find out how SKX fares in the Quality, Value, and Stability components.
SKX is ranked 14th out of 35 stocks in the Athletics and Recreation space. You can learn more about the stocks in this segment by clicking here.
The analysts are bullish on SKX, setting an average target price of $63.49 for the stock. If SKX reaches this price target, it will have popped by more than 18%. Of the 14 analysts who have issued recommendations for SKX, four view it as a Strong Buy, seven view it as a Buy, and three view it as a Hold.
SKX has a forward P/E ratio of 20.35. This ratio is a bit higher than most investors prefer yet it is still fairly reasonable. The stock's beta of 1.49 is not causing concern.
LULU is an athletic apparel business that sells apparel and accessories primarily designed for women. However, LULU also has some products for men and girls. LULU products include fitness pants, tops, shorts, bags, socks, jackets, and other fitness-related items.
LULU has a C POWR Rating so it is a Hold. The stock has a D Value component and Cs in the Growth and Stability components. Click here to find out how LULU fares in the rest of the POWR Ratings.
Out of 66 publicly traded companies in the Fashion & Luxury space, LULU is ranked 42nd. You can find out more about the stocks in this space by clicking here. LULU's forward P/E ratio of 57.01 is high yet the stock is trading within a couple of dollars of its 52-week high.
The top analysts do not expect LULU to move much. If LULU hits the average analyst price target, it will only have increased by less than half a percentage point in value.
NKE has a C POWR Rating. The stock has a D Value component grade along with Cs in the Stability and Growth components. You can find out more about NKE's POWR Rating components in the Sentiment, Quality, and Momentum components by clicking here.
Of the 35 stocks in the Athletics & Recreation Space, NKE is ranked 25th. Investors are encouraged to click here to learn more about the stocks in this space.
NKE has a forward P/E ratio of 39.29, indicating it might be a bit overvalued. The stock has a beta of 0.87 so it is unlikely to provide considerable gains should the market make a considerable upward move. There are clearly better stocks to add to your portfolio than NKE.
NKE shares were trading at $172.18 per share on Thursday morning, up $0.27 (+0.16%). Year-to-date, NKE has gained 22.20%, versus a 18.59% 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.2 Athletic Apparel Stocks to Buy, 2 to Avoid appeared first on StockNews.com