The recent downfall of the stock presents a good investing opportunity to the investors. It will be a good entry point for future gains, considering the growth drivers of the company.
PVH Corp (NYSE:PVH)
The stock of PVH Corp reached its new heights (~$121) in January 2013, beating the earlier record of its 52-week high of ~$119.62. The stock has given an impressive return of around 38% in the last six months. The company’s overall positive outlook of FY2012 and its business expansion strategy via acquisitions were the main drivers for the upside movement in the stock.
Warnaco Group Inc (NYSE:WRC) Acquisition
PVH recently completed its acquisition of The Warnaco Group which will strengthen its portfolio pushing it to be among the leaders of the branded apparel companies. Via this acquisition, the company will be able to capitalize on Warnaco’s already deep rooted presence in Asia and Latin America. This will also support PVH’s already existing operations in North America, Europe and will expedite the company’s operations in all the major consumer markets, providing it with a global presence.
Following this acquisition, the company has immediate opportunities for its flagship brands, Calvin Klein (CK) and Tommy Hilfiger. PVH is aiming at again establishing its leading position under CK Jeans in North America and Europe. While on the other hand, the company is targeting expanding the Tommy Hilfiger brand in Asia and Latin America via Warnaco.
I expect the top-line synergy from this acquisition will start flowing in 2014. However, in 2013 PVH will witness more of the initial cost synergies of around $100 million, leading to an accretion of around $0.35 per share in 2013’s EPS.
The investor’s takeaway
Overall, I believe Ralp Lauren is an attractive stock which will be beneficial for both income as well as growth investors. The company remains focused on returning good value to its shareholders via dividend and share repurchases. It has around ~$627 million cash available at the end of 3Q13. Similarly, Under Armour is also well-placed in the industry and its portfolio expansion plans will further boost up its market share benefiting the investors. On the other hand, PVH already has some of the big brand names under its portfolio. The company’s Warnaco acquisition will provide it the much needed support to enhance its brand image globally.
I recommend a buy for all the three stocks.
The article 3 Apparel Stocks You Must Own in 2013 originally appeared on Fool.com and is written by Madhu Dube.
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