The U.S. apparel industry, one of the largest in the global market, is segregated by Zacks in Retail – Apparel and Shoes and Textile – Apparel. The basic difference in this classification is that the first one includes apparel retailers, while the second comprises apparel manufacturers.

There seems to be a lot of cheer in the Textile-Apparel industry that has witnessed a rise of 10.2% this year, with many companies in the space putting up a stellar show — buoyed by favorable economic indicators and strategic growth endeavors. However, the industry, which has been battling stiff competition and soft traffic due to consumers’ inclination toward online shopping has lagged the S&P 500’s rise of 22.9%.

Nonetheless, the industry (ranked among the top 16% out all Zacks industries) appears to be a bright spot for investors in 2018, given the current market scenario and companies’ efforts to keep pace with the evolving consumer trends. Notably, the U.S. economy is riding on improved consumer spending, rising consumer confidence and favorable labor market scenario. The latest GDP data also speaks of a healthy domestic economy. Per the Bureau of Economic Analysis, the third and final estimate for third-quarter GDP jumped at an annual rate of 3.2%.

These factors, along with textile-apparel players’ strategies of keeping pace with the evolving consumer trends; international expansion and brand enhancement efforts have resulted in solid earnings trends for many companies. Moreover, encouraging views by these firms reflects solid confidence in future prospects, instilling further optimism about these stocks that have fared better than the industry so far this year.

So, let’s take a look at some robust textile-apparel players, which are poised to maintain their spectacular performance and have the potential to march ahead of industry in 2018 as well.

4 Textile-Apparel Stocks You Must Have

Guess’, Inc. GES is a solid bet. This Zacks Rank #2 (Buy) company has surged a whopping 56.6% this year, backed by its impressive earnings surprise history. Notably, this designer, marketer, distributor of casual apparel and accessories has delivered earnings surprise in the past three consecutive quarters, while revenues have been rising year over year for the past five quarters. Guess? has been gaining from its superb performance in Europe and Asia, which have been yielding profitable results, owing to store openings and comps growth. Also, Guess?  relies on social networking sites to advertise and market its products, while it has also been focusing on linking brick-and-mortar stores, e-commerce and mobile sales to improve its online operations. These upsides encouraged management to raise its fiscal 2018 earnings view, whe it released its last quarterly outcome. (Looking for the Best Stocks for 2018? Be among the first to see our Top Ten Stocks for 2018 portfolio here.)

We also suggest investing in PVH Corporation PVH, which specializes in designing and marketing branded dress shirts, neckwear, sportswear, jeanswear, intimate apparel, swim products, footwear, handbags and other related products. The company has displayed a robust surprise trend with earnings topping estimates for 14 straight quarters and sales marking the fifth consecutive beat in third-quarter fiscal 2017. This is mainly backed by solid momentum at its premium Calvin Klein and Tommy Hilfiger brands. Also, PVH Corp. has been undertaking significant steps to resonate with the evolving retail trends and integrate consumers’ changing preferences in its operating decisions. Driven by these factors as well as solid expectations for fourth-quarter 2017, this Zacks Rank #2 company raised its guidance for the fiscal. Encouragingly, the stock has gained 51.5% year to date. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors should also take a look at Lululemon Athletica Inc. LULU, which marked its third and eighth consecutive earnings and sale beat, respectively, in third-quarter fiscal 2017. This is clearly the reason behind this Zacks Rank #1 (Strong Buy) company’s year-to-date rally of 22.2%. Well, this yoga-inspired athletic apparel company has been steered by focus on ivivva’s remodeling and progress on its strategy for 2020, which concentrates on product innovation, building store fleet in North America, expanding digital business and international expansion. Driven by the favorable third-quarter results and initial holiday season momentum across business channels since the start of the fourth quarter, the company provided an encouraging view for the fourth quarter and raised guidance for fiscal 2017.

Further, investors can count on Michael Kors Holdings Ltd. KORS, a global luxury lifestyle company, founded by designer Michael Kors. The company delivered its 10th consecutive positive earnings surprise and third straight sales beat in the recently reported second-quarter fiscal 2018. This was driven by the company’s strategic endeavors including constantly deploying resources to expand product offerings, undertaking expansions in Asia, opening new stores, building shop-in-shops and upgrading e-commerce platform. Further, the company raised guidance for fiscal 2018, highlighting its sturdy ongoing prospects. Courtesy of these factors, this Zacks Rank #2 stock has gained 48.9% so far this year.

Clearly, the aforementioned gems are likely to emerge as rock-solid investment options in 2018.

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lululemon athletica inc. (LULU): Free Stock Analysis Report
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