NIKE, Inc. (NKE), PVH Corp (PVH): Should You Invest in Iconix Brand Group Inc (ICON) or Iconic?

Iconix has a market cap of $1.8 billion, making it a much smaller company than NIKE, Inc. (NYSE:NKE), with a market cap of $56.9 billion. In bull markets, investors and traders prefer to invest in smaller companies, since broader market moves carry most stocks higher and smaller-cap stocks move at a more rapid pace.

Looking forward, it would be difficult to imagine a scenario where the broader market continues its upward rampage. Therefore, NIKE, Inc. (NYSE:NKE) is likely to be a much safer investment. And it’s an investment that you can feel comfortable adding to on signs of weakness.

You might have also noticed PVH Corp (NYSE:PVH) in the chart above. PVH owns several popular brands, including Calvin Klein. This was made possible by the company’s purchase of Warnaco, which has boosted revenue by almost 50%. PVH also now owns Tommy Hilfiger in addition to IZOD, Bass, DKNY, and more.

Similar to Iconix, PVH Corp (NYSE:PVH) has exposure to a broad range of consumers, from mass- market to luxury demographics. That said, PVH is currently trading at 30 times earnings, making it much more expensive than Iconix at 17 times earnings. While PVH Corp (NYSE:PVH) is a solid company, if you’re choosing between the three, then NIKE, Inc. (NYSE:NKE) offers the most safety without sacrificing growth potential.

Conclusion

Iconix has experienced a stellar run since the market bottom of March 2009. If you have never heard of Iconix before, then I’m sorry but you most likely missed it. Due to external economic conditions, not company-specific factors, Iconix is likely to have more downside risk than upside potential at this point in time. Once again, Nike would be a safer bet.

The article Should You Invest in Iconix or Iconic? originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Nike.

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