Editor's pick: Originally published Jan. 13.
As the new year rolls in and markets fall under a dismal shadow, it's heartening to still find reliable stocks that offer solid income and growth possibilities. Here are three apparel stocks that should deliver healthy returns in 2016, notwithstanding the sector's flat performance in 2015.
Let's quickly get you the details. They're the sort of value propositions with excellent growth prospects that super investor Warren Buffett would love.ROST data by YCharts
Ross Stores Inc. (ROST)
Ross Stores deserves your attention largely on account of its track record, sound business model and excellent future prospects. And the company's stock gained even during the last recession.
Analysts project Ross Stores to deliver earnings-per-share (EPS) growth of 12.7% (Jan. 2016 fiscal year) along with a 7.8% upswing in sales. The momentum should keep going, with next year slated to witness double-digit EPS growth as well as sales growth at nearly 7%.
The third quarter for Ross stores was solid, but bear in mind, the numbers weren't a flash in the pan. Value-focused shoppers (or, moderate-to-low income customers) have consistently come back for its collection of brand bargains, driving repeat sales.
Additionally, Ross Stores has managed to develop a competent cost control system, even as it surpassed earnings expectations for six straight quarters.
At a time when other apparel retailers are struggling with their performance, Ross Stores clearly stands out. Its shares are available at a price-to-earnings growth (PEG) ratio (five-year expected) of 1.91, compared to others like Guess' Inc. (2.56), The Gap Inc. ((2.75 times), The Buckle Inc. (46.55), and DSW Inc. (4.73).
The consensus forecast among 33 analysts covering Ross Stores is that the stock will outperform the market. They also expect a 10.3% rise in price targets with an estimated median figure of $58.00. Those are sterling metrics that should appeal to even the most discriminating value investors.