In this article we will look at the 11 Best Fashion Stocks To Buy Now. Let’s look at where Nike, Inc. (NKE) 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
Nike, Inc. (NYSE:NKE)
No. of Hedge Funds as of Q2 2024: 66
Nike (NYSE:NKE) is a luxury retailer specializing in the design, marketing, and distribution of athletic clothing, footwear, accessories, equipment, and services for fitness activities. It sells its athletic and fitness collection under several brands, including NIKE, Jordan Brand, and Converse. In addition, it specializes in casual apparel, footwear, and accessories, distributing and licensing them under the All-Star, Chuck Taylor, Star Chevron, One Star, and Jack Purcell trademarks.
Nike (NYSE:NKE) is leveraging its previously existing Express Lane to build new ways of working across the entire product development process. By calling it the Speed Lane, the company is integrating it as a company-wide effort to use its resources to accelerate design, use advanced digital tools to expedite development, and leverage key manufacturing partners to quicken product production and testing. Speed Lane is expected to bring out innovations in the second half of the fiscal year and release several new fitness and lifestyle franchises, widening its consumer base.
Nike’s (NYSE:NKE) revenue grew by around 1% in fiscal 2024, with EPS increasing 15%. The company has undertaken several strategic shifts in the past year, including organization and leadership changes, capacity building for investment in consumer-facing activities, and starting a multi-year innovation cycle. But most of all, Nike’s (NYSE:NKE) sharp focus is on sports. It is scaling innovation and newness, fielding brand distinction to build momentum in its product portfolio.
Nike (NYSE:NKE) also has plans to reinvest around $1 billion in consumer-facing activities in fiscal 2025. The investment is anticipated to expedite the company’s strong growth by increasing resources in merchandising, design, and product creation for its key sports dimensions. It will also speed up the company’s running in key cities, elevate its brand distinction in physical retail, and drive bolder, larger brand campaigns, starting from the Paris Olympics and EC ’24.
Mar Vista Focus strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its first quarter 2024 investor letter:
“NIKE, Inc.’s (NYSE:NKE) recent earnings report was a mixed bag. While revenue met expectations and earnings exceeded them, the stock price dipped due to management’s cautious outlook for fiscal 2025. The company is currently undergoing a period of internal restructuring and product line adjustments, which is expected to lead to flat revenue growth in the first half of the coming fiscal year. However, this transition aims to position Nike for long-term success.
Our conviction in Nike remains high, and we expect it to emerge stronger and more competitive once the restructuring is complete despite the softer revenue forecast. Nike still anticipates earnings will grow around 10% in calendar 2024 and will accelerate to 15% in 2025 as execution normalizes.”
Overall, NKE ranks first 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 NKE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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