5 Best Clothing Stocks To Buy Now

1. NIKE, Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 70

NIKE, Inc. (NYSE:NKE), the American retailer of athletic footwear, apparel, sports equipment, and accessories, is one of the best clothing stocks to monitor. On November 15, NIKE, Inc. (NYSE:NKE) declared a $0.340 per share quarterly dividend, an 11.5% increase from its prior dividend of $0.305. The dividend is payable on December 28, to shareholders of record on December 5. 

On November 22, Cowen analyst John Kernan raised the price target on NIKE, Inc. (NYSE:NKE) to $118 from $114 and kept an Outperform rating on the shares. The analyst said momentum in pricing outside of apparel remains clear, with new innovation set for Spring/Summer 2023 and its ability to flow goods at a much improved rate into both DTC and wholesale for Nike and Jordan Brand.

According to Insider Monkey’s Q3 data, NIKE, Inc. (NYSE:NKE) was part of 70 hedge fund portfolios, compared to 72 in the prior quarter. Ken Fisher’s Fisher Asset Management featured as the largest stakeholder of the company, with 8.7 million shares worth $728.8 million.

Here is what Leaven Partners has to say about NIKE, Inc. (NYSE:NKE) in its Q3 2022 investor letter:

“Nike: NKE shares were a top detractor this quarter on higher inventory balances leading to lower-than-expected gross margins for the next couple of quarters. The company reported 1Q23 sales and EPS beats, but freight costs, markdowns, and the strong dollar weighed on gross margins. Nike continues to expect low double-digit currency-neutral sales growth, but the strong dollar will reduce overall sales growth and discounted inventory will further reduce gross margins for the year.

Nike is, by far, the leading athletic footwear, apparel, and equipment company in the world with over $46 billion in revenue, $6 billion in 2021 annual free cash flow, and over $4 billion of excess cash. After working through its near-term currency and gross margin issues, we expect the company to return towards management’s guidance of at least 10% annual revenue growth, and return to its accelerating profit growth, as longer-term we expect margins to be materially aided by rising average sales prices (from both increased pricing and a mix shift to more premium products), the company’s deep innovation pipeline, a secular shift from the company’s traditional wholesale channels to a more direct-to-consumer approach (now 35% of revenues up from 16% ten years ago), and a more streamlined supply chain. We believe that the continued global secular growth trend towards active wear will continue to aid Nike’s top-line growth, while we expect the combined gross and operating margin improvements from its initiatives will drive long-term mid-teens or higher annual EPS growth for the foreseeable future.”

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