2 Apparel Retail Stocks Rated 'Strong Buy' to Grab Now

The retail industry recovered last year with the reopening of physical stores amid increased vaccinations. Also, a surge in consumer spending led to digital retail platforms witnessing record sales. According to an NBC news report, until December 16, 2021, retailers announced 5,083 store openings compared to 5,079 store closures.

The apparel retail industry is also witnessing increasing demand as people go out of their homes with the easing of pandemic-related restrictions. According to a Market Research report, the global clothing and clothing accessories stores market is expected to reach $1,549.69 billion in 2025, growing at a CAGR of more than 6%.

Given this backdrop, fundamentally sound apparel retail stocks Shoe Carnival, Inc. (SCVL) and Tilly's, Inc. (TLYS) could be solid additions to your portfolio now. These stocks have an overall A (Strong Buy) rating in our proprietary POWR Ratings system.

Shoe Carnival, Inc. (SCVL)

SCVL, together with its subsidiaries, operates as a family footwear retailer in the United States. Currently, the company operates 383 stores in 35 U.S. states and Puerto Rico. It also sells its products through online shopping at shoecarnival.com.

On December 3, 2021, SCVL announced the substantial acquisition of all of the assets of privately-held, family-owned Shoe Station, Inc. Mark Worden, SCVL’s President and CEO, said, “We are excited to welcome Shoe Station to the Shoe Carnival team. Coming on the heels of our best quarter of our best year in our 43-year history, this deal accelerates our journey toward becoming a multi-billion-dollar retailer in the years ahead.”

SCVL’s net sales came in at $356.34 million for the fiscal quarter ended October 30, 2021, up 29.8% year-over-year. The company’s net income came in at $46.84 million, up 219.1% year-over-year. Moreover, its EPS came in at $1.64, representing a 221.6% year-over-year rise.

SCVL’s revenue is expected to come in at $1.29 billion in fiscal 2022, representing an increase of 32% year-over-year. Its EPS is expected to increase 819.6% year-over-year to $5.15 in fiscal 2022. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, SCVL has gained 115.5% to close yesterday’s session at $39.89.

SCVL has an overall A grade equating to a Strong Buy in our POWR Ratings system. It has an A grade for Momentum and Quality and a B grade for Growth and Value. Again, it is ranked #2 of 63 stocks in the A-Rated Fashion & Luxury industry. Click here to see the additional ratings for SCVL (Stability and Sentiment).

Tilly's, Inc. (TLYS)

TLYS operates as a specialty retailer of casual apparel, footwear, accessories, and hard goods for young men, women, boys, and girls in the United States. The company operates through 238 stores across 33 states and online through tillys.com.

On December 2, 2021, Ed Thomas, the company’s President and CEO, said, "The fourth quarter is off to a strong start and, despite all of the challenges in the current environment, we remain optimistic about our business prospects for the remainder of fiscal 2021 and into fiscal 2022 at this time."

For the fiscal third quarter ended October 30, 2021, TLYS’ net sales came in at $206.10 million, representing a 46.9% year-over-year rise. Its net income came in at $20.83 million, up 886% year-over-year. Moreover, its EPS increased 842.9% year-over-year to $0.66.

Analysts expect TLYS’ revenue to increase 47.5% year-over-year to $783.68 million in fiscal 2022. Its EPS is expected to increase 5,450% year-over-year in fiscal 2022 to $2.14. It surpassed the EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 99.3% to close yesterday’s trading session at $16.44.

It’s no surprise that TLYS has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Momentum and Sentiment and a B grade for Growth and Value.

TLYS is ranked #7 in the Fashion & Luxury industry. We have also rated the stock for Stability and Quality. Click here to get all the TLYS ratings.

SCVL shares were trading at $38.01 per share on Wednesday afternoon, down $1.88 (-4.71%). Year-to-date, SCVL has declined -2.74%, versus a -1.39% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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