Sportswear / Activewear Sector Benchmark
12 stocks evaluated through my rating system
The sportswear sector stands out as an attractive area for investment due to its dynamic growth. The increasing focus on health and wellness has led to a substantial rise in demand for athletic apparel and footwear, not only among professional athletes but also among everyday consumers who value comfort, style, and performance in their daily wear.
This trend is further amplified by the shift towards more active lifestyles, with activities such as running, yoga, and gym workouts becoming integral parts of people's routines. As a result, sportswear has evolved from a niche market into a mainstream fashion segment with broad consumer appeal.
The importance of innovation
The sector is driven by relentless innovation, with leading companies continually introducing new technologies and materials that enhance the functionality, comfort, and sustainability of their products. This includes advancements in moisture-wicking fabrics, lightweight and durable materials, and eco-friendly production methods. Such innovations not only differentiate brands in a competitive market but also create strong consumer loyalty, as customers increasingly seek out products that align with their values, particularly in sustainability.
Brand strength, a key competitive advantage
Another factor contributing to the sector's investment appeal is the strong brand equity and global presence of key players. Brands have established themselves as household names, with extensive distribution networks and marketing strategies that resonate with a wide audience. These companies have also effectively leveraged the power of digital marketing and e-commerce, expanding their reach and enhancing customer engagement.
Opportunities in the current market cycle
The sportswear industry is currently navigating a difficult part of the market cycle. After years of rapid growth fueled by a global focus on health, fitness, and athleisure trends, the sector is experiencing a period of recalibration. Rising inflation, shifting consumer spending patterns, and increased competition have created a more challenging environment for many brands.
However, this phase also presents opportunities for consolidation and strategic realignment. The stock prices are significantly lower than years ago. Companies that can innovate, adapt to evolving consumer demands, and maintain strong brand identities are likely to emerge stronger as the industry begins its next growth phase. Investors may find this a strategic entry point, with the potential for significant upside as the sector stabilizes and eventually rebounds.
The benchmark
The table presents a comparative analysis of 12 sportswear companies, ranked according to several performance metrics: Growth Score, Quality Score, Valuation Score, Shareholder Score, and Market Score. Each of these metrics is based on several metrics (like past and future growth, net profit margin, PE, FCF Yield, PEG, and so one).
The score is not an investment signal but allows to identify which companies are in my investable universe. The details in the different scores allow you to identify which companies can be attractive investments for you depending on your own criteria.
After this selection, a deep dive on each stock will be necessary (business, fair price, etc).
Among the most intriguing stocks, we have:
On Holdings. While its impressive growth isn't fully reflected in the growth score (with a maximum of 10), the company has demonstrated strong expansion above 30% a year.
Anta Sports. This Chinese stock may be appealing, but investors might face challenges due to the complexities of investing in the Chinese market.
RVRC, Lululemon, and Skechers. These stocks are relatively affordable yet still exhibit solid growth potential. They belong in the GARP category.
Deckers Outdoor and On Holdings. Both companies show excellent growth dynamics, though their market prices already reflect this potential. Despite being expensive, these stocks could still be worthwhile if their growth trajectory continues.
RVRC. It boasts the highest total score, but keep in mind it is a small-cap stock, which may impact its brand strength compared to larger players.