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Iconic lifestyle apparel company PVH (PVH) - Get PVH Corp. Report  offers a tantalizing opportunity to derive investing value from high-quality clothing.

From its early days in 1881 to its status now as a global, diversified apparel behemoth, PVH, which has more than $8 billion in annual revenue, is rapidly expanding across its digital commerce, licensing, retail and wholesale channels.

The company's Calvin Klein and Tommy Hilfiger brands are poised to stay healthy and drive profit and revenue growth.

The stock's recent dip provides a window for entry. 

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Peers such as Columbia Sportswear, Deckers Outdoor, Ralph Lauren (owner of Polo) and Wolverine World Wide lag behind PVH's market reputation.

Over the years, PVH's consistent performance has included sustained strong operating margins in the face of currency oscillations, annual revenue that has risen four-fold in the past decade and a near tripling of annual profits. The stock is a smart choice for investors' long-term wealth-building strategies.

PVH has also been steadily extending its operational focus. The company operates in Asia Pacific, Europe and Latin America.

This means that about two-third of PVH's earnings before interest and taxes is subject to foreign-exchange challenges. And yet, PVH has managed to meet earnings estimations fairly often.

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Despite most of its key clothing segments entering a mature phase, PVH has ensured its free cash flow numbers are unaffected with consistent returns on capital.

PVH's earnings per share came in at less than 4% annually on average for the past five years, but this rate is projected to rise to nearly 7% over the next half a decade.

The company will also improve its leverage over the next 12 to 18 months. By using its strong free cash flow to buy back shares and acquire licensed product categories and territories, PVH could further strengthen its potential.

Notwithstanding the currency headwinds, PVH should maintain positive constant-currency sales growth for its portfolio of brands and operating margins near double digits.

Ignore the worries about the stock trading near its 52-week high.

At a forward price-earnings ratio of nearly 14 times, PVH represents a great value. Peers such as Ralph Lauren (16.4 times), Under Armour (42.4 times) and VF (14.6 times) are more expensive.

The 20 analysts offering 12-month price forecasts for PVH have a median target of $122 a share, which would represent a gain of more than 15%.


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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.