CNBC’s Jim Cramer highlighted six fashion and apparel stocks on Monday for investors looking for alternatives to the struggling AI trade.
While technology stocks have come under pressure in recent weeks, consumer stocks have been resilient. The SPDR S&P Retail ETF (XRT) gained 10% this quarter, while the Technology Select Sector SPDR Fund (XLK) fell 11%. Cramer said falling interest rates could provide an additional boost to apparel companies heading into the holiday shopping season.
“Ralph Lauren, Tapestry, Levi’s, VF Corp, Kontoor Brands and Reformation are some of the fashion stocks that we think look best right now,” the “Mad Money” host said.
Ralph Lauren remains Cramer’s favorite apparel stock, thanks to its consistent growth under CEO Patrice Louvet. The company has continued gaining momentum across women’s apparel, accessories and outerwear, and has been strengthening its international presence, particularly in Asia. Although the stock pulled back in August and September, it has since recovered, and Cramer is optimistic ahead of Thursday morning’s earnings report.
Tapestry, the parent of Coach and Kate Spade, also reports Thursday. Cramer likes Coach’s position in the accessible luxury market, particularly its popularity among younger female consumers. However, shares have fallen 20% since the company’s August earnings report, when guidance failed to impress investors following a massive multiyear rally. “I hope this Thursday’s report can represent the start of a comeback for Tapestry,” he said.
Levi Strauss is another potential turnaround story. Shares fell below $20 following disappointing earnings a few weeks ago, but CEO Michelle Gass told Cramer that the company had moved quickly to address inventory shortages in popular styles. The stock has since rebounded more than 20% from its post-earnings low, though Cramer still considers it inexpensive at roughly 14 times earnings, with a 2.8% dividend yield. “I think this is a good option to play the broader strength in denim that we keep hearing about,” he said.
VF Corp, which owns The North Face, Vans and Timberland, is showing signs of improvement after years of struggles, particularly at Vans. Cramer pointed to encouraging results from a recent Piper Sandler teen survey and a strong quarterly report as evidence that the sneaker brand’s turnaround may be gaining traction. Shares have risen roughly 14% since he recommended the stock about two weeks ago.
Kontoor Brands offers another opportunity tied to denim and corporate restructuring. The company plans to sell its Lee brand for up to $1 billion, allowing it to focus on Wrangler and outdoor apparel maker Helly Hansen. Cramer expects the sale to be followed by substantial share repurchases and said the remaining businesses have room to grow. Shares trade at roughly 14 times earnings and offer a dividend yield near 3%.
Cramer’s more speculative pick is Reformation. The women’s fashion brand initially struggled after its IPO in late July, but Cramer said it “has great growth, it’s profitable, and it has a differentiated shopping experience with a technology kicker.” Cramer highlighted the stock in late September; shares surged more than 31% in October.
