5 Stocks Hedge Funds Are Investing In

2. Carter’s, Inc. (NYSE:CRI)

Number of hedge fund holdings at the end of Q3: 28

2024 Return: 11.3%

Carter’s, Inc. (NYSE:CRI) founded in 1865, is an America-based marketer of branded childrenswear. Carter’s, Inc. (NYSE:CRI) is appealing to investors due to its efficient management, strong growth track record, and global presence. Carter’s, Inc. (NYSE:CRI)  is headquartered in Atlanta, Georgia and has a market capitalization of $2.586 billion.

Heartland Value Plus Fund made the following comment about Carter’s, Inc. (NYSE:CRI) in its Q3 2023 investor letter:

“We’ve seen a fair amount of insider buying in our holdings, an encouraging sign that gives us confidence to hold tight. One such company is Carter’s Inc. (NYSE:CRI), which sells apparel for babies and children under the Carter’s and OshKosh B’gosh brands. So far in 2023, CRI has returned $96.6 million to shareholders in the form of share repurchases and cash dividends. That brings the repurchase and dividend totals to roughly $3 billion over the past 15 years.

Like all retailers, Carter’s has been undertaking inventory reduction in the aftermath of the pandemic. CRI, however, was 6 to 12 months ahead of other retailers in managing its inventories, a focal point of Carter’s self-help strategy. Since there is limited fashion risk in baby and infant apparel, the company recently packed a portion of its inventory in storage to be brought back later, thereby avoiding the need for steep discounts to work down backlogs. Management has also done a good job de-risking its supply chain in China and globally. For example, Carter’s was early to recognize that low water levels in the Panama Canal threatened delays through that waterway and moved to reduce the amount of its merchandise going through that route.

Meanwhile, CRI has an enviable balance sheet, very little debt, and very strong free cash flow. Yet, the stock trades at less than 12X earnings and less than 7X enterprise value to EBITDA.”

This isn’t a bad stock, trading at 13 times forward earnings and offering a 3.7% dividend. Nevertheless, it operates in an ultra competitive industry and the stock’s performance over the last 5 years is a testament to that. There are better and cheaper stocks that you can invest in. We shared an AI company that is trading at a cheaper multiple and delivering much higher growth rates than CRI below this article. Check that out.