In this article, we will look at the 12 Best Apparel Stocks to Invest In.
Consumer Spending and Weather: What’s the Connection?
On February 25, Matt Boss, JPMorgan retail analyst, appeared on CNBC’s ‘Closing Bell’ to discuss the retail trade. He said the market has seen the worst start to spring in around 30 years. From a weather perspective, there have been significant store closures as every part of the country, excluding the southwest, has been clobbered by unseasonable weather.
On top of it, the country has seen 30% more snow, which has pressured seasonal sales. The unseasonable climate has thus created an unfavorable environment. States in the southwest, including California, which have had normal weather, have undergone a 0% change in consumer spending. In fact, consumer spending in states like California, Nevada, and Arizona was up 5%, exactly the same as the rate in November and December.
READ ALSO: 10 Best Vegan Stocks to Buy According to Analysts and 10 Best Discount Store Stocks to Invest In.
The Condition of the American Market and Consumer
Further talking about the conditions of the market and consumers, Boss was of the opinion that a selective recession is materializing. The real force driving consumer spending is the 50% of the economy driven by higher-income consumers. He said that $60 trillion in wealth creation since 2019 is the number to be noticed here. At the low end, the consumer continues to be pressured. However, in retail, this trend means that those offering value continue to win, which is usually the case for retailers catering to value and convenience simultaneously. He said that retailers offering products that are better than a year ago and not compromising on value at the same time make up the equation on the basis of which the market is seeing real winners and losers. He also believed that consumer resilience presents a buying opportunity in the retail sector weakness.
On March 3, Chris Horvers, JPMorgan head of broadlines/hardlines retail, joined CNBC’s ‘The Exchange’ to discuss the retail trade and the weakening consumer. He said that over the past three years, the market has consumers seeking the cheapest prices, particularly in the food market, which is proving to be a tailwind for discount retailers. Thus, he thinks it would be difficult to pass along tariffs, especially in the discretionary categories. The retailers would have to eat a little bit, and so would the manufacturers. However, there is also likely to be an elasticity impact.
We discussed the potential impact of Trump’s tariffs on retail stocks in a recently published article on 12 Cheap Retail Stocks to Buy According to Hedge Funds. Here is an excerpt from the article:
“The Trump administration proposed 25% tariffs on goods imported from Canada and Mexico and 10% tariffs on Chinese-imported goods. Analysts believe these tariffs will affect retail stocks and the goods manufactured in the tariffed countries, at least theoretically. While tariffs on Mexico and Canada have been delayed, they have kicked in for China, according to Yahoo! Finance. This has led to several retailers moving sourcing out of China to contain costs.
Simeon Siegel, retail analyst at BMO Capital Markets, appeared in an episode of Yahoo! Finance’s Opening Bid podcast. Talking about the potential effect of Trump’s tariffs on retail stocks, he was of the opinion that we are focusing on tariffs more than is required. Taking a purely business perspective, he reasoned that a tariff is nothing more than a cost input going up, quite like how the cost of cotton, shipping, or labor can rise.
When such cases materialize, companies take steps to deal with the rising costs, but they don’t become all-encompassed by them. Siegel posited that the uncertainty surrounding this scenario is dramatically more concerning than the actual severity. Approaching the situation as an analyst, he said that he is focusing on companies with the pricing power and capability to deal with rising costs, regardless of why the costs are increasing. Healthy brands with healthy businesses are thus the way to approach this conversation.”
With these trends in view, let’s look at the 12 best apparel stocks to invest in.
A fashionable retail store showcasing the company’s apparel products.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 apparel stocks. We then selected the top 12 most popular stocks among elite hedge funds as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12 Best Apparel Stocks to Invest In
12. Foot Locker, Inc. (NYSE:FL)
Number of Hedge Fund Holders: 35
Foot Locker, Inc. (NYSE:FL) is an apparel and shoe retailer that operates in three segments: North America, Europe, Middle East, and Africa (EMEA), and Asia Pacific. Its portfolio of brands includes Foot Locker, Kids Foot Locker, Champs Sports, Atmos, and WSS. The omnichannel retailer operates around 2,523 stores in 26 countries across Europe, North America, New Zealand, Australia, and Asia.
The company drove three consecutive quarters of positive comparable sales and year-over-year gross margin expansion, reflecting the results of its strategies in an increasingly dynamic external environment. It attained a total comp increase of 2.6% in fiscal Q4 2024, supported by share gains from its global Foot Locker and Kids Foot Locker banners. Foot Locker, Inc. (NYSE:FL) also saw a gross margin improvement of 300 basis points year-over-year, ahead of its expectations and led by merchandise margin recovery against the prior year’s higher level of promotions.
Foot Locker, Inc.’s (NYSE:FL) continued execution of its cost savings plan generated $35 million in fiscal Q4 2024. The company has solid operations and attained significant financial milestones in 2024, including a return to positive enterprise comp sales growth, gross margin expansion, and positive free cash flow. It expects all of these trends to continue into 2025, ranking it on our list of the best apparel stocks to invest in.
11. Urban Outfitters, Inc. (NASDAQ:URBN)
Number of Hedge Fund Holders: 37
Urban Outfitters, Inc. (NASDAQ:URBN) is a lifestyle products and services company that operates through three segments: Retail, Wholesale, and Nuuly. The Retail segment encompasses its store and digital channels and manages the Anthropologie, Free People, FP Movement, and Urban Outfitters brands. The Nuuly segment comprises the Nuuly brand, which includes Nuuly Thrift and Nuuly Rent, a monthly women’s apparel subscription rental service.
The company reported a 9% sales growth in fiscal Q4 2025, reaching record $1.6 billion. Four of its brands performed exceptionally, posting record Q4 sales. Urban Outfitters, Inc. (NASDAQ:URBN) also made significant progress in slashing the operating loss of its Urban Outfitters brand compared to last year while also improving its sales trend. Its sales growth was partly driven by a 5% increase in the Retail segment comp due to a high single-digit DTC channel comp and a low single-digit store comp.
Anthropologie and Free People also attained high single-digit positive Retail segment comp. Urban Outfitters, Inc.’s (NASDAQ:URBN) Nuuly segment also delivered robust double-digit revenue growth, primarily due to a 53% increase in average active subscribers compared to the prior year.
10. The Gap, Inc. (NYSE:GAP)
Number of Hedge Fund Holders: 39
The Gap, Inc. (NYSE:GAP) is a specialty retailer in the US that offers apparel, accessories, and personal care products for women, men, and children. Its brand portfolio includes Old Navy, Gap, Banana Republic, and Athleta brands.
The company gained market share for the eighth consecutive quarter in fiscal Q4 2024, reflecting the increasing popularity of its brands among consumers. It attained one of the highest gross margins in the last 20 years, increasing its operating income by more than $500 million and operating margin by 330 basis points versus last year’s adjusted rate. In addition, The Gap, Inc. (NYSE:GAP) delivered a full-year EPS of $2.20, the highest since 2018, demonstrating its earnings power.
On January 27, The Gap, Inc. (NYSE:GAP) announced an expanded partnership with Sean Wotherspoon, its global vintage curator, to release GapVintage and bring the company’s iconic product archive directly to customers across the globe. The company will include seasonal and themed drops, taking control of its vintage products as the secondhand market continues to grow and resonate among younger generations.
9. Ralph Lauren Corporation (NYSE:RL)
Number of Hedge Fund Holders: 43
Ralph Lauren Corporation (NYSE:RL) is a luxury fashion retailer specializing in designing, marketing, and selling luxury lifestyle products, including apparel, footwear, accessories, fragrances, home, and hospitality. Its brand portfolio spans Ralph Lauren, Polo Ralph Lauren, Ralph Lauren Collection, Lauren Ralph Lauren, Ralph Lauren Purple Label, Double RL, and others. Besides manufacturing luxury items for men, women, and children, the company’s hospitality segment includes restaurants like New York City’s The Polo Bar and Chicago’s RL Restaurant.
The company holds a competitive market advantage due to its ability to transcend industry cycles. While luxury retailers are typically driven by fashion trends, Ralph Lauren (NYSE:RL) focuses on the basics, which is why it has a tendency to remain relevant to its consumers even amidst changing market dynamics.
Ralph Lauren Corporation (NYSE:RL) reported an 11% growth in its fiscal Q3 2025 revenue, surpassing expectations. This growth was driven by a better-than-expected holiday performance in all geographies. Its global direct-to-consumer comparable store sales also grew by 12%, driven by positive retail comps across its channels and regions. The company ranks ninth on our list of the 12 best apparel stocks to invest in.
8. Victoria’s Secret & Co. (NYSE:VSCO)
Number of Hedge Fund Holders: 46
Victoria’s Secret & Co. (NYSE:VSCO) is a women’s intimates, apparel, and beauty products retailer. It operates under the Victoria’s Secret, Victoria’s Secret PINK, and Adore Me brands. The company’s product offerings include sleepwear, loungewear, swimwear, athleisure, lingerie, prestige fragrances, and body care.
Victoria’s Secret & Co. (NYSE:VSCO) reported net sales of $2.106 billion for fiscal Q4 2024, reflecting a 1% growth compared to fiscal Q4 2023. Total comparable sales for the fourth quarter of 2024 increased 5%. It also reported net income of $193 million for the quarter, up from $181 million compared to the same quarter last year. Operating income also reached $268 million in fiscal Q4 2024 compared to $258 million last year.
While the company recognizes the uncertain macro environment, shifting consumer confidence, and unseasonal weather as potential headwinds, its forecast expects the environment to gradually improve through the execution of its strategies designed to grow sales in its North American and International businesses. Victoria’s Secret & Co. (NYSE:VSCO) is forecasting fiscal year 2025 net sales to be in the range of $6.2 billion to $6.3 billion.
7. Capri Holdings Limited (NYSE:CPRI)
Number of Hedge Fund Holders: 47
Capri Holdings Limited (NYSE:CPRI) manages and operates globally popular luxury brands such as Jimmy Choo, Versace, Michael Kors, and others. The Versace segment includes luxury apparel, accessories, and footwear. Jimmy Choo’s segment covers luxury footwear, small leather goods, accessories, and handbags. The Michael Kors segment operates through four retail formats: lifestyle stores, e-commerce sites, collection stores, and outlet stores.
On November 14, the company announced the mutual termination of its merger agreement with Tapestry, Inc. After the termination, Capri Holdings Limited (NYSE:CPRI) is focusing on its future and is solidifying its long-term growth potential through its three luxury houses. Its portfolio of brands boasts strong customer loyalty and heritage, which positions it for long-term success.
Capri Holdings Limited (NYSE:CPRI) also has a solid distribution network to build upon. It has more than 1,200 directly operated luxury retail locations, along with an extensive wholesale network to reach consumers in areas where it doesn’t have its own stores. Management expects operational trends to improve throughout fiscal year 2026, positioning the company to return to growth in fiscal 2027 and beyond. It ranks seventh on our list of the best apparel stocks to buy now.
Greenlight Capital stated the following regarding Capri Holdings Limited (NYSE:CPRI) in its Q4 2024 investor letter:
“We increased our position in Capri Holdings Limited (NYSE:CPRI). When the court blocked CPRI’s sale, we suffered a moderate loss. Fortunately, the position was not large. While we expected the merger would go through and we were surprised by and disagreed with the court’s ruling, we recognized the downside risk if the deal broke. When we get an adverse result on an event like this, our instinct is to declare that our thesis has broken and take our loss. After evaluating this situation, however, we came to the opposite conclusion and added to our holdings. During the period when the merger was pending, CPRI’s results were simply awful. Before the proposed deal was announced, CPRI shares traded at about $35, and when the deal broke, the market took the lousy results into account and the shares fell to about $20. Our current thesis is that the interim results were so awful that they likely reflected management distraction, if not neglect. We also believe there is strategic potential for the company’s Versace and Jimmy Choo brands. It should not be difficult for management to re-engage and achieve at least somewhat less awful results. If that happens, the shares should stage a recovery.”
6. Abercrombie & Fitch Co. (NYSE:ANF)
Number of Hedge Fund Holders: 51
Abercrombie & Fitch Co. (NYSE:ANF) is a global omnichannel retailer that offers an assortment of apparel, personal care products, and accessories for women, men, and kids. Its brand portfolio includes Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids, and Hollister brands, including Hollister and Gilly Hicks.
The company delivered net sales growth of 9% in fiscal Q4 2024, with comparable sales growth of 14%. Its full-year net sales reached $4.95 billion, up 16% compared to 2023. This growth was attributed to comparable sales growth of 17%, with double-digit comparable sales growth across regions and brands.
Abercrombie & Fitch Co. (NYSE:ANF) has a strong brand portfolio that is increasingly resonating with consumers. The Abercrombie brands delivered a 16% full-year 2024 net sales growth on comparable sales of 15%, while the Hollister brands grew net sales by 15% on comparable sales of 19%. The company’s full-year 2025 outlook expects a net sales growth of 3% to 5% and an operating margin of 14% to 15%. Abercrombie & Fitch Co. (NYSE:ANF) also announced a new $1.3 billion share repurchase authorization and expects $400 million in share repurchases for 2025.
Carillon Eagle Small Cap Growth Fund stated the following regarding Abercrombie & Fitch Co. (NYSE:ANF) in its Q3 2024 investor letter:
“Abercrombie & Fitch Co. (NYSE:ANF) is a global multi-brand omnichannel specialty retailer of apparel, personal care products, and accessories for men, women, and kids. The stock lagged during the period despite reporting strong quarterly results and lifting forward guidance. We believe the performance is more a result of elevated investor expectations than any weakening of the underlying fundamentals, which we believe continue to remain strong.”
5. Burlington Stores, Inc. (NYSE:BURL)
Number of Hedge Fund Holders: 52
Burlington Stores, Inc. (NYSE:BURL) is an off-price retailer of branded apparel. It also sells accessories, footwear, and home merchandise for relatively lower prices. Its clothing section offers an elaborate array of fashion-focused, in-season merchandise, including women’s and men’s ready-to-wear, youth, baby, and coats. The company operates more than 1007 stores, primarily under the brand name Burlington Stores.
The company delivered strong performance in fiscal Q4 2024, with comparable store sales growth of 6% versus a guidance of 0% to 2%. This growth was attributed to deliberate strategies that the company’s merchants, supply chain, and store teams executed. Its net income for the quarter was $261 million, while diluted EPS was $4.02.
Burlington Stores, Inc. (NYSE:BURL) has a strong off-price business model. It saw total sales growth of 11% in fiscal year 2024, with comparable store sales growth of 4%. The company opened 101 net new stores in 2024 and relocated 31 of its older oversized locations. Investors are bullish on the stock due to its solid metrics, which reflect significant progress toward the company’s long-term financial goals. Its median price target of $235.03 implies an upside of 42.75% from current levels.
4. Lululemon Athletica (NASDAQ:LULU)
Number of Hedge Fund Holders: 60
Founded in 1988, Lululemon Athletica (NASDAQ:LULU) is a luxury athletic apparel, footwear, and accessories brand with around 38,000 employees. It sells leisure-athletic wear and accessories such as socks, bags, and yoga mats for fitness activities.
Lululemon Athletica (NASDAQ:LULU) has significant expansion potential, supported by new store openings and higher same-store sales. It reported a 9% year-over-year growth in revenue through the first three quarters of fiscal 2024, higher than that of fiscal 2023 and 2022. The company holds a competitive market advantage due to its premium offerings, as a key factor in its strategy is to differentiate its offerings from those of its competitors.
Although the company had a challenging 2024, it has historically performed soundly. Its stock has soared by around 670% in the past decade, primarily due to the company’s solid underlying fundamentals. It reported a 19% annualized revenue growth between fiscal Q3 2014 and fiscal Q3 2024. In addition, the company’s diluted earnings per share (EPS) grew at a compound annual growth rate (CAGR) of 21% in the same period, which reflects its profitability potential. Lululemon Athletica (NASDAQ:LULU) ranks fourth on our list of the 12 best apparel stocks to invest in.
3. Ross Stores, Inc. (NASDAQ:ROST)
Number of Hedge Fund Holders: 62
Ross Stores, Inc. (NASDAQ:ROST) is an off-price apparel retailer that operates home fashion stores under two brands: Ross Dress for Less (Ross) and DD’s Discount. It operates over 1,764 Ross store locations in 43 US states, the District of Columbia, and Guam. The company also has over 345 DD’s Discounts stores across 22 US states. Customers can find discounted in-season designer and name-brand apparel at the company’s stores, along with footwear, accessories, and home fashion. These discounts typically vary from 20% to 60% compared to department and specialty store regular prices, giving the company a competitive market edge.
With consumers looking for discounts and deals instead of giving in to brand loyalty in the current retail environment, investors are bullish on the stock. Ross Stores, Inc. (NASDAQ:ROST) reported fiscal Q4 2024 earnings at the high end of its expectations, with sales driven by the positive responses of its customers to the improved assortments of quality branded bargains. Sales for fiscal Q4 2024 were $5.9 billion with a comparable store sales gain of 3%, on top of a 7% gain in the same period last year.
Ross Stores, Inc. (NASDAQ:ROST) reported similar positive results for the full year 2024. Its net income for fiscal 2024 rose to $2.1 billion compared to $1.9 billion last year, while total sales for the year increased to $21.1 billion, up from $20.4 billion in the prior year. These trends reflect the company’s strong operations, ranking it third on our list of the best apparel stocks to invest in.
2. Nike, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 73
Nike, Inc. (NYSE:NKE) designs, markets, and distributes luxury athletic footwear, accessories, equipment, and services for sports and fitness activities. Its operating segments span EMEA, Greater China, APLA, and North America. The company also designs products specifically for the Converse and Jordan brands.
Nike, Inc. (NYSE:NKE) reported a decline of 8% in its revenues on a reported basis and a 9% decline on a currency-neutral basis in fiscal Q2 2025. This decline was primarily due to the ongoing headwinds from the company’s franchise management actions. It is shifting its product portfolio by reducing the proportion of its business driven by its classic footwear franchises, including Air Jordan 1, Air Force 1, and Dunk. The company is actively rebalancing product allocations to its highest traffic channel to maximize full-price realization and franchise health.
However, there is reason to be optimistic, as Nike, Inc. (NYSE:NKE) is considered to be the top apparel and footwear brand by a significantly wide margin among almost 14,000 teenagers who took the Piper Sandler “Taking Stock With Teens” fall 2024 survey. This shows that the brand holds a dominant position among this young demographic. Its gross margin also held steady at 43.6% in fiscal Q2 2025.
In addition, the company’s broad visibility lends it a significant market advantage. It holds the resources to endorse and partner with prominent athletes, provide uniforms for pro sports leagues, and even gain consumer attention through strategic collaborations, such as the recently announced collaboration with Kim Kardashian’s SKIMS.
ClearBridge Large Cap Growth Strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its Q2 2024 investor letter:
“Other moves during the quarter included sales of United Parcel Service (UPS) and NIKE, Inc. (NYSE:NKE). Nike has become overly reliant on key platforms, like Jordan, for revenue growth, while innovation in areas like running has lagged. Nike could face continued revenue and profit pressure as it invests to re-invigorate innovation and re-position the business back toward wholesale outlets. As such, we are seeking out better ways to participate in the global consumer recovery in companies where earnings estimates have already reset.”
1. The TJX Companies, Inc. (NYSE:TJX)
Number of Hedge Fund Holders: 74
The TJX Companies, Inc. (NYSE:TJX) operates in the Marmaxx and HomeGoods, TJX International, and TJX Canada segments. Its stores offer an assortment of value home decorations, apparel, decorative accessories, footwear, accessories, giftware, and more.
The TJX Companies, Inc. (NYSE:TJX) opened its 5,000th store in the quarter, marking a significant milestone for the company. In fiscal 2025, it returned $4.1 billion to shareholders through its buyback and dividend programs.
The company’s overall sales surpassed $56 billion in fiscal Q4 2025, while full-year comparable store sales grew by 4%. The TJX Companies, Inc. (NYSE:TJX) attained a significant increase in profitability, along with a double-digit increase in earnings per share (EPS). In addition, the company’s net sales grew to $16.4 billion, a 5% increase versus last year’s adjusted sales. A 5% growth in its fiscal Q4 2025 consolidated comps sales also exceeded the company’s expectations. This growth was attributed to an increase in customer transactions.
Bretton Fund stated the following regarding The TJX Companies, Inc. (NYSE:TJX) in its Q4 2024 investor letter:
“Pre-pandemic, The TJX Companies, Inc. (NYSE:TJX) and Ross were usually in lockstep operationally and performance-wise. The main difference is TJX is much larger and has more divisions: TJ Maxx has higher-end goods; Marshalls has lower price points and is very similar to Ross; HomeGoods and Homesense offer furniture and household goods. But as inflation spiked up, TJX was better able to push through price increases, helped in part due to its relatively higher-income shoppers being less sensitive to inflation. TJX’s earnings growth and share price have outperformed Ross the past few years, but we expect that to converge in the near term. TJX’s and Ross’s earnings increased an estimated 9% and 11%, respectively, and their stocks returned 31% and 10%.”
Overall, TJX ranks first among the 12 best apparel stocks to invest in. While we acknowledge the potential of apparel stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TJX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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