In this article we will look at the 11 Best Fashion Stocks To Buy Now. Let’s look at where Ralph Lauren Corp. (RL) stands against other best fashion stocks to buy now.
Overview of the Global Fashion Industry
The global fashion industry is a force to reckon with as one of the largest industries across the globe. The global fashion retail market was worth $91.25 billion in 2023, as per a report by Zion Market Research. This market is anticipated to grow to $157.88 billion by 2032, at a compound annual growth rate of around 7.09% between 2024 and 2032.
According to the McKinsey report on The State of Fashion 2024, the fashion market in the US and Europe experienced slow growth in 2023. In comparison, China’s fashion market performed better in the first half of 2023 before gradually waning in the second half. The luxury segment, however, underwent considerable growth in the first half of 2024. But it, too, began to experience the effects of weaker demand in the second half of 2023.
According to McKinsey’s forecast, the global fashion industry is expected to undergo a top-line growth of between 2% and 4% in 2024. The luxury segment has a more optimistic outlook, with growth expectations reaching 3% to 5% globally.
However, with inflation consistently falling, the global fashion industry is expected to exceed expert estimates and make a solid comeback. The Federal Reserve also cut interest rates in September, its first cut since the COVID-19 pandemic, slashing half a percentage point off benchmark rates. These recent happenings are expected to positively impact the global fashion industry in general and the US fashion segment in particular, due to a potential increase in consumer spending.
The Global Fashion Industry: Potential Challenges and Future Outlook
However, despite the apparently optimistic landscape, the fashion industry is not immune to challenges. According to a survey by McKinsey & Company, 62% of executives cite geopolitical instability as the most prominent threat to fashion industry growth. In addition, around 55% of executives believe economic volatility is the largest hindrance to increased revenue. 51% consider inflation to be the primary cause behind this roadblock.
Expert opinion on the industry’s future outlook is also divided. While 37% of respondents believe the sector will likely stay the same, 38% expressed a pessimistic outlook, claiming that the industry will worsen with time. In contrast, 26% expressed hope and optimism, believing that the global fashion industry will likely come back. The survey also concluded that since cost-saving tactics across the industry have almost been exhausted, a more than 50% intent of raising prices stands.
Our Methodology
We first consulted stock screeners from Finviz and Yahoo Finance, along with online rankings, to create an initial list of 30 publicly traded fashion companies. From this list, we selected the 11 stocks with the highest number of hedge funds as of Q2 2024 and used that as our ranking metric.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
11 Best Fashion Stocks to Buy Now
Ralph Lauren Corp. (NYSE:RL)
Ralph Lauren (NYSE:RL) is a globally famous fashion retailer that specializes in designing, marketing, and selling luxury lifestyle products, including apparel, footwear, accessories, fragrances, home, and hospitality. It operates in North America, Europe, and Asia with a brand portfolio spanning Ralph Lauren, Polo Ralph Lauren, Ralph Lauren Collection, Lauren Ralph Lauren, Ralph Lauren Purple Label, Double RL, and others. Apart from 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.
Ralph Lauren (NYSE:RL) holds a significant competitive advantage due to its market standing. The company’s desirability and power are continuously increasing, demonstrating its ability to resonate across geographies, cultures, and generations. Other key drivers of growth are its organizational agility and diversified growth engines, which highlight the efficiency of its long-term growth strategies.
The company continuously invests in its strategic priorities to maintain its global standing. These key areas include marketing, digital capabilities, and targeted ecosystem expansion across key cities. It is on the oath to drive long-term sustainable growth and value creation beyond its initial three-year plan, fueled by increased efficiencies and operation discipline.
The success of these strategies can be corroborated by the company’s strong financials. Q1 fiscal 2025 saw continued growth across its three strategic pillars: elevation of its lifestyle brand, winning key cities via its consumer ecosystem, and driving the core while expanding for more. As part of efforts to revamp its lifestyle brand, Ralph Lauren (NYSE:RL) has undertaken activities in London, Milan, New York, and across China, increasing its social media following in the process.
It has also managed campaigns across key demographics and geographics, such as the women’s collection runway show in New York City in April and the Only Polo campaign. In addition, its local activities spanned SoHo in New York, Dubai, Miami’s Design District, L.A.’s Sunset Boulevard, Roppongi in Tokyo, and Seoul. These efforts are helping the company leverage longer-term brand building while focusing on new customer acquisition and high-quality sales.
Ralph Lauren (NYSE:RL) is also working to boost its social media standing. Its followers grew by low teens to last year, crossing the 60 million mark let by Instagram, Threads, TikTok, Line, and Douyin. It ranks tenth on our list of the 11 best fashion stocks to buy now.
Overall, RL ranks tenth among the best fashion stocks to buy now. While we acknowledge the potential of fashion companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.