5 Best Clothing Stocks To Buy Now

In this article, we discuss 5 best clothing stocks to buy now. If you want to see more stocks in this selection, check out 12 Best Clothing Stocks To Buy Now. 

5. Ross Stores, Inc. (NASDAQ:ROST)

Number of Hedge Fund Holders: 43

Ross Stores, Inc. (NASDAQ:ROST) is a California-based company that operates off-price retail apparel and home fashion stores. The stores primarily offer apparel, accessories, footwear, and home fashions. In addition to posting market-beating Q3 2022 results, Ross Stores, Inc. (NASDAQ:ROST) declared on November 17 a $0.31 per share quarterly dividend, in line with previous. The dividend is payable on December 30, to shareholders of the company as of December 6. 

On November 21, Barclays analyst Adrienne Yih raised the price target on Ross Stores, Inc. (NASDAQ:ROST) to $127 from $98 and reiterated an Overweight rating on the shares. The company’s Q3 earnings report “was the second proof point that the balance of power has shifted in Off-Price’s favor,” the analyst wrote in a research note.

According to Insider Monkey’s third quarter database, 43 hedge funds held stakes in Ross Stores, Inc. (NASDAQ:ROST), and Jean-Marie Eveillard’s First Eagle Investment Management is the leading stakeholder of the company. 

Here is what Madison Mid Cap Fund has to say about Ross Stores, Inc. (NASDAQ:ROST) in its Q3 2022 investor letter:

“Ross Stores is one of our longest-tenured holdings. Its profits have gyrated wildly since the beginning of the pandemic, first from store closures and shutdowns, then from the pent-up demand for apparel, and more recently, from the economic uncertainty. Adding to that, Ross is finding that consumers’ spending trends in terms of mix and categories have been more difficult to predict than usual, resulting in some mismatches between its merchandise assortment and what shoppers want. This doesn’t appear to be a Ross-specific issue, as other apparel retailers have reported similar problems. We attribute this to the unusual post-pandemic environment, and while we don’t have a crystal ball as to when this will normalize, we believe it will.”

4. Farfetch Limited (NYSE:FTCH)

Number of Hedge Fund Holders: 50

Farfetch Limited (NYSE:FTCH) is a London-based provider of an online marketplace for luxury fashion goods in the United States, the United Kingdom, and internationally. It operates through three segments – Digital Platform, Brand Platform, and In-Store. Farfetch Limited (NYSE:FTCH) is one of the premier clothing stocks to monitor. 

On November 21, investment advisory Societe Generale maintained a Buy recommendation on Farfetch Limited (NYSE:FTCH) but lowered the firm’s price target on the shares to $11 from $12. Analyst Abhinav Sinha issued the ratings update. 

According to the third quarter database of Insider Monkey, Gavin Baker’s Atreides Management is a prominent position holder in the company, with approximately 11 million shares worth $81.30 million. Overall, 50 hedge funds were long Farfetch Limited (NYSE:FTCH) at the end of Q3 2022, up from 39 funds in the earlier quarter. 

Here is what Polen U.S. Small Company Growth Fund has to say about Farfetch Limited (NYSE:FTCH) in its Q1 2022 investor letter:

“We also initiated a position in global luxury fashion e-commerce marketplace Farfetch in the first quarter and took advantage of meaningful weakness in the company’s share price during the period. Farfetch previously had too large a market cap for the Portfolio, but it has since moved to a level where it’s appropriate to own it – both in this Portfolio and in our smid-cap strategy. The company’s fundamentals remain attractive as indicated by the compelling results Farfetch reported in February.

The company remains an early mover with “the world’s only truly global marketplace for luxury at scale”. Farfetch has a broader reach around the world with a diversity of brands that is much larger than its competitors. Many of the items it sells are exclusive. Our research shows that its brand assortment, brand image, geographic breadth, an inventory-light business model, a more compelling offering for luxury partners, and artificial intelligence are all competitive edges for the company. We believe Farfetch is well-positioned for the continued market share shift from offline to online in this category. The personal luxury goods market has trailed other categories in online penetration, but consumer behaviors and preferences shifted as a result of the pandemic creating more comfort with purchasing goods like this online. Changed behavior and the general shift to a higher portion of Millennial and Gen Z luxury shoppers supports this continued shift as does the growth in emerging market demand.”

3. The TJX Companies, Inc. (NYSE:TJX)

Number of Hedge Fund Holders: 55

The TJX Companies, Inc. (NYSE:TJX) is a Massachusetts-based retailer of off-price apparel and home fashions. The company sells family apparel, furniture, rugs, lighting products, giftware, soft home products, cookware, and other merchandise. On September 19, The TJX Companies, Inc. (NYSE:TJX) declared a $0.295 per share quarterly dividend, in line with previous. The dividend is payable on December 1, to shareholders of record on November 10. It is one of the best clothing stocks to buy now. 

On November 18, Barclays analyst Adrienne Yih raised the price target on The TJX Companies, Inc. (NYSE:TJX) to $94 from $76 and reiterated an Overweight rating on the shares following the Q3 results.

Among the hedge funds tracked by Insider Monkey, 55 funds were bullish on The TJX Companies, Inc. (NYSE:TJX) at the end of September 2022, compared to 49 funds in the prior quarter. Tim Hurd and Ed Magnus’ BlueSpruce Investments held the largest stake in the company, comprising 5.35 million shares worth $332.3 million. 

Here is what ClearBridge Investments Large Cap Value Strategy has to say about The TJX Companies, Inc. (NYSE:TJX) in its Q4 2021 investor letter:

“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year, for example, in positioning the portfolio to benefit from a flush consumer eager to return to spending and traveling. New positions included TJX, an off-brand retailer with a large presence in the U.S. and Europe that should continue to benefit from the contraction of many traditional retailers, particularly as consumer spending resumes.”

2. Lululemon Athletica Inc. (NASDAQ:LULU)

Number of Hedge Fund Holders: 57

Lululemon Athletica Inc. (NASDAQ:LULU) is a Canadian retailer of athletic apparel and accessories for women and men. It operates in two segments – Company-Operated Stores and Direct to Consumer. Lululemon Athletica Inc. (NASDAQ:LULU) is one of the top clothing stocks to invest in. 

On October 25, JPMorgan analyst Matthew Boss maintained an Overweight rating on Lululemon Athletica Inc. (NASDAQ:LULU) but lowered the price target on the shares to $413 from $464. The analyst raised his Q3 revenue estimate to up 29.6% year-over-year, above consensus at up 24.8%. He believes newness and innovation are driving “model momentum” at Lululemon Athletica Inc. (NASDAQ:LULU).

According to Insider Monkey’s data, 57 hedge funds were long Lululemon Athletica Inc. (NASDAQ:LULU) at the end of September 2022, compared to 50 funds in the preceding quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the biggest stakeholder of the company, with 1.06 million shares worth $296.6 million. 

1. NIKE, Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 70

NIKE, Inc. (NYSE:NKE), the American retailer of athletic footwear, apparel, sports equipment, and accessories, is one of the best clothing stocks to monitor. On November 15, NIKE, Inc. (NYSE:NKE) declared a $0.340 per share quarterly dividend, an 11.5% increase from its prior dividend of $0.305. The dividend is payable on December 28, to shareholders of record on December 5. 

On November 22, Cowen analyst John Kernan raised the price target on NIKE, Inc. (NYSE:NKE) to $118 from $114 and kept an Outperform rating on the shares. The analyst said momentum in pricing outside of apparel remains clear, with new innovation set for Spring/Summer 2023 and its ability to flow goods at a much improved rate into both DTC and wholesale for Nike and Jordan Brand.

According to Insider Monkey’s Q3 data, NIKE, Inc. (NYSE:NKE) was part of 70 hedge fund portfolios, compared to 72 in the prior quarter. Ken Fisher’s Fisher Asset Management featured as the largest stakeholder of the company, with 8.7 million shares worth $728.8 million.

Here is what Leaven Partners has to say about NIKE, Inc. (NYSE:NKE) in its Q3 2022 investor letter:

“Nike: NKE shares were a top detractor this quarter on higher inventory balances leading to lower-than-expected gross margins for the next couple of quarters. The company reported 1Q23 sales and EPS beats, but freight costs, markdowns, and the strong dollar weighed on gross margins. Nike continues to expect low double-digit currency-neutral sales growth, but the strong dollar will reduce overall sales growth and discounted inventory will further reduce gross margins for the year.

Nike is, by far, the leading athletic footwear, apparel, and equipment company in the world with over $46 billion in revenue, $6 billion in 2021 annual free cash flow, and over $4 billion of excess cash. After working through its near-term currency and gross margin issues, we expect the company to return towards management’s guidance of at least 10% annual revenue growth, and return to its accelerating profit growth, as longer-term we expect margins to be materially aided by rising average sales prices (from both increased pricing and a mix shift to more premium products), the company’s deep innovation pipeline, a secular shift from the company’s traditional wholesale channels to a more direct-to-consumer approach (now 35% of revenues up from 16% ten years ago), and a more streamlined supply chain. We believe that the continued global secular growth trend towards active wear will continue to aid Nike’s top-line growth, while we expect the combined gross and operating margin improvements from its initiatives will drive long-term mid-teens or higher annual EPS growth for the foreseeable future.”

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