Anyone who sees me Mike Carr’s Trade Room in every day knows I stick to a particular style of clothing.
Most days, you will catch me wearing some random soccer jersey.
That’s just my thing.
It isn’t all I wear … I’ll toss on a suit if I need something more formal or a T-shirt and shorts if I’m doing work around the house.
But soccer jerseys are my go-to for everyday wear.
Everyone has their own style they wear for work or leisure.
But one thing’s for certain: No matter the style, we are always in search of new clothes or accessories.
Today, I will dive into the trend of apparel sales worldwide and show you how Adam O’Dell’s proprietary Green Zone Power Ratings system identified one high-flying clothing stock worth considering for your portfolio.
Global Retail Sales Continue to Rise
With higher inflation pushing the cost of goods and services up, there’s a fear that industries like retail could suffer.
The fear is rooted in the fact that, faced with a choice between the mortgage and a new pair of shoes, we’ll choose the mortgage every time.
Inflation has started to subside here in the U.S., and the fear of slumping retail sales has gone by the wayside.
The Conference Board reported its Consumer Confidence Index jumped from 102.5 in May to 109.7 in June — its highest level since January 2022. That tells me we are more confident of economic conditions here than we have been in a while.
And clothing sales are reflecting that confidence too:
In 2022, clothing sales globally reached $1.5 trillion. By 2027, eMarketer expects sales to top $1.9 trillion — a 26.7% increase in four years.
Today’s Power Stock will not only grab a significant slice of this pie, but also rates “Strong Bullish” on our Green Zone Power Ratings system.
Urban Outfitters Poised for Continued Growth
Urban Outfitters Inc. (Nasdaq: URBN) rates 92 out of 100 on our proprietary Green Zone Power Ratings system. That means we are “Strong Bullish” on the stock and expect it to outperform the broader market by 3X over the next 12 months.
The company‘s brands include Anthropologie, BHLDN, Free People, Terrain and Urban Outfitters across retail stores and websites.
It also operates Nuuly, a subscription service that offers women’s clothes for a monthly fee.
URBN rates highly on Momentum (95) as the stock has jumped more than 64% over the last 12 months. For comparison, stocks in the apparel and accessories industry have averaged a 16.5% climb during the same time.
The stock rates a 91 on Value with price-to ratios (earnings, sales, cash flow and book value) all lower or in line with its industry peers.
It also earns a “Strong Bullish” rating on Quality with a net margin of 3.7% compared to an industry average of -0.1%. Its operating margin is also higher than its industry peers.
Bottom line: Apparel sales continue to climb around the world.
Urban Outfitters’ stock has outperformed its peers and the broader market over the last 12 months and remains a strong value for investors.
These are reasons why URBN is a compelling addition to your portfolio.
Until next time!
Matt Clark, CMSA®
Chief Research Analyst, Money & Markets