Lululemon Athletica inc. (LULU), Nike, Inc. (NKE) & Gildan Activewear Inc (GIL): Which Workout Gear Manufacturers Are Good Investments?

NIKE, Inc. (NYSE:NKE) trades at $62 and has a market cap of $55 billion. With a profit margin of 9.2% and an operating margin of 12%, it is one of the more profitable apparel companies around. With a return on assets of 12.6% and a return on equity of 22%, Nike is managed very effectively. The company has an expected PEG ratio of 2.1 for the next five years, which puts the company in the slightly overvalued category. The company’s fourth quarter results will be announced on June 27.

Gildan Activewear is affordable and promising

Gildan Activewear Inc (NYSE:GIL), the Canadian apparel company, is one of the most promising apparel stocks at the moment. Gildan’s strength lies in selling classic designs that do not run the risk of creating fashion faux-pas like Lululemon Athletica inc. (NASDAQ:LULU)’s too-sheer yoga pants. The company’s timeless products appeal to all age groups and is popular with families. The company plans to penetrate the U.S. retail market further and enhance its image with global consumer brands as a reliable supply chain partner.

Gildan Activewear Inc (NYSE:GIL) purchased Anvil Holdings, a supplier of premium T-shirts for the print-wear market, for $88 million in 2012. After the acquisition of Anvil, Gildan reported  27.4% growth in sales in the second quarter results of 2013. Though Gildan Activewear does not have the loyal brand following that Lululemon Athletica inc. (NASDAQ:LULU) and NIKE, Inc. (NYSE:NKE) enjoy, it is the industry leader in print-wear.

Gildan Activewear Inc (NYSE:GIL) Activewear trades at $40 and has a market cap of almost $5 billion, making it one of the largest apparel stocks around. With a profit margin of 13% and an operating margin of 14.4%, Gildan is profitable and attractive. Its price-to-sales ratio of 2.4 is slightly disappointing but NIKE, Inc. (NYSE:NKE)’s price-to-sales ratio stands 2.2, which is only slightly better. Gildan Activewear has a five-year expected PEG ratio of 1.5 and is slightly overvalued. However, its increased focus on expanding its US operations and acting as an excellent supply chain partner may help it to become more attractive to investors.

Bottom line

The future for clothing companies that deal with active and sports gear is promising. As people become increasingly health conscious, we will see more people joining gyms and yoga classes. That directly correlates with increased apparel sales for companies like Lululemon, Nike and Gildan Activewear Inc (NYSE:GIL). Certainly, these stocks are good long-term investment options.

Jaiyant Cavale has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica inc. (NASDAQ:LULU) and Nike. The Motley Fool owns shares of NIKE, Inc. (NYSE:NKE).

The article Which Workout Gear Manufacturers Are Good Investments? originally appeared on

Jaiyant is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.