Making investment decisions based on the latest market trends and changes in the consumer behavior can potentially translate to strong profits in the long run. For example, the rise of athleisure wear is one of the latest developments in the apparel industry and has resulted in booming sales for several companies.
Countless retail stocks have a dark cloud over them at this time, but companies that offer athleisure products, or athletic leisurewear, are generating strong earnings and mouthwatering returns for investors.
The increased demand for athleisure wear is largely driven by the fact that so many people are working from home at this time. There’s also the recent rise of at-home fitness during the pandemic. While these factors are providing temporary sales boosts, the truth is that athleisure wear is here to stay.
Many of these athleisure wear stocks have already had a strong rally, but that doesn’t mean they can’t go higher as demand for these products remains strong and the holiday season approaches.
Here are 3 athleisure wear stocks to consider buying now:
1. Nike
Shares of retail apparel giant Nike (NYSE:NKE) continue to head to new all-time highs thanks to the company’s Q1 earnings report and the aforementioned athleisure market trend. There’s also a lot to like about how the company is approaching e-commerce. Although it’s always a little uncomfortable to buy shares of a company at all-time highs, Nike is one of the best athleisure and retail apparel stocks to own thanks to its world-renowned brand and global leadership in athletic apparel.
There are a few things worth noting from the company’s Q1 earnings report that make Nike an interesting prospect. First, you have a 10% year-over-year increase in diluted earnings per share. The fact that Nike was able to generate an EPS increase during a period when physical Nike retail stores are seeing sharp sales declines is impressive, to say the least.
The thing that stood out the most about the Q1 numbers was the massive increase in Nike Brand digital sales. The company saw an 82% year-over-year increase in digital sales which tells investors that the company is experiencing massive growth in e-commerce.
2. Dick’s Sporting Goods
Finding brick-and-mortar retail stocks that look strong in this market is certainly not easy, but Dick’s Sporting Goods (NYSE:DKS) fits the bill. It’s a company that operates 700 sporting goods stores and sells some of the most successful athleisure wear brands at its stores including Nike, Under Armour (NYSE:UAA), and Columbia (NASDAQ:COLM) products. While sales for the company took a hit during the first half of the year, it appears that they are rebounding nicely as there was a 20.7% increase in same-store sales during Q2.
Dick’s Sporting Goods stock is worth a look thanks to rapid growth in its e-commerce sales, which increased by a staggering 194% year-over-year in Q2. Q2 earnings also saw the company report its highest ever quarterly sales and earnings, confirming that Dick’s has the right strategic approach during a very challenging time for many retailers.
Perhaps the most surprising thing about this company is the fact that plans to open 11 new stores across the United States this year. With a strong balance sheet that included $1.1 billion in cash and cash equivalents as of Q2 along with a 2.04% dividend yield, there’s a lot for investors to like about Dick’s Sporting Goods stock going forward.
3. Lululemon
If you are looking for the king of athleisure wear, look no further than Lululemon (NASDAQ:LULU). It has been one of the strongest stocks during the pandemic and is up over 40% year-to-date. Not bad for a brick-and-mortar retailer that had the majority of its stores closed for a good portion of the year.
What sets Lululemon apart from competitors is the fact that it controls its distribution and sells its premium athleisure wear items in its physical stores or through the company’s website. It’s often credited as being the creator of the athleisure apparel trend and the company continues to grow at a rapid pace. Lululemon products are known to be high-quality and the company’s brand is extremely popular, which are also strong reasons to consider this stock.
The company reported strong Q2 earnings back in August including a year-over-year increase in direct-to-consumer sales of 155% to $554.3 million and plans to open 30 to 35 net new stores this year. With international expansion goals and a booming e-commerce business that could see record holiday sales in the final portion of the year, there are plenty of reasons to be optimistic about Lululemon going forward. The stock dropped 12% in September and offers investors a nice entry at this time.