Coach, Michael Kors, Ralph Lauren Among The Top 10 Apparel Stocks Loved by Hedge Funds

PVH Corp (NYSE:PVH) saw a net increase of 2 filers and called 22 filers to its name in 3Q, making it the fifth most popular apparel stock owned by hedge funds. This apparel maker of iconic brands such as Calvin Klein and Tommy Hilfiger is expected to grow earnings over the next five years at 13% annually. Despite being up over 60% year to date, PVH still trades relatively cheaply, at 20x trailing earnings – only 16x forward earnings – making PVH an interesting value play. Billionaire Steven Cohen with SAC Capital made PVH one of his big bets in 3Q (check out Steven Cohen’s other top moves).

Ralph Lauren Corp (NYSE:RL) came in at fourth with 25 filers. This high-end retailer trades in the mid-range of the industry at a 23x P/E. With a forward P/E of 18x and one of the higher industry growth rates at 14% we believe this company could be a solid investment. Billionaire investor and fund manager Stephen Mandel had nearly 4% of his 13F portfolio invested in Ralph Lauren at the end of 3Q (check out Mandel’s newest stock picks).

Carter’s, Inc. (NYSE:CRI) barely beat out Ralph Lauren for third with 28 filers. Carter’s focuses on children’s brands, including OshKosh and Carter’s stores, and offers investors some of the best ‘growth at a reasonable price’ opportunities in the apparel industry. Expected to grow five-year earnings at 18% annually, this apparel company trades with a PEG near 1.0.

Coach, Inc. (NYSE:COH) was in second with 31 filers. Coach also offers some solid growth much like that of peer Ralph Lauren at a 14% five-year expected growth rate, according to sell-side analysts. This luxury accessories company gives investors a great value opportunity, trading at two of the lowest P/E (16x) and forward P/E ratios (13x) of the group we’ve discussed.

Michael Kors Holdings Ltd (NYSE:KORS) was the top apparel stock by far with 43 filers owning the stock – after a net increase of 13 filers – the largest increase of our ten stocks. Since Kors’ IPO at the beginning of the year, shares have nearly doubled, and its P/E is now above 40x. Even so, we still see value in Kors. This apparel company has the highest expected five-year growth rate of our ten apparel stocks at nearly 30%, and trades on a forward P/E basis at 26x.