5 Reasons to Invest in Gildan Activewear Inc

Gildan Activewear Inc (TSX:GIL)(NYSE:GIL) is a big player in the apparel industry and here’s why it belongs in your portfolio.

| More on:
The Motley Fool

Gildan Activewear Inc (TSX: GIL)(NYSE: GIL) still has the fundamental strength to move beyond its inventory problems in 2014. It operates in the Printwear and Branded Apparel segments.

The company is working to expand its market share in targeted, global printwear markets. Here are five reasons to consider this major apparel industry player for your portfolio.

1. Brands and product range

Gildan is a supplier of branded basic family apparel. This includes T-shirts, fleece, sport shirts, underwear, socks, hosiery, and shapewear. Brands that it owns include Gildan, Gold Toe, and Anvil, along with brand extensions. Gildan produced double-digit growth in all product categories in its Q3 2014. The company is continuing to place less emphasis on private label programs. It has new programs for international lifestyle brands in activewear and socks.

2. New yarn investments for high-quality innovative products

Gildan is working on getting high-end products to market. It’s made new yarn investments and has high-quality products now in its Gold Toe brand as well as its Platinum brand. For its printwear in the United States, Gildan is continuing to look to add better quality fabrics. It is looking at ways to upgrade its existing product lines. The company is leveraging its technology to build sales of printwear.

3. Investments in manufacturing facilities

The company is working on three new yarn-spinning facilities. Its Salisbury, North Carolina, ring-spun yarn facility started operations in Q2 and is moving ahead on schedule. Gildan is allocating capital to its textile and sock manufacturing operations in Honduras and a new distribution centre in the country. It is also allocating funds for the initial investment to purchase land, and initial project planning and preparation for its new Costa Rican textile facility. Gildan is looking to double underwear manufacturing capacity in fiscal 2015.

4. Analyst opinions

In a recent research note, analysts at Canadian Imperial Bank of Commerce raised their price target on shares of Gildan Activewear from $62.00 to $67.00. Furthermore, analysts at National Bank of Canada recently raised their price target on the company’s shares from $70.00 to $72.00, with an ‘outperform’ stock rating. Thirteen investment analysts have issued a ‘buy’ rating on Gildan’s stock. Three gave a ‘strong buy’ rating. Gildan has a consensus price target of $68.31.

5. Dividend payments

Gildan pays a quarterly dividend. Its board recently declared a quarterly cash dividend of US$0.108 per share. The company has a modest dividend yield of 0.750% and its dividend rate is $0.43. Gildan’s three-year average dividend growth rate is 46.67%. The company announced a 20% increase in its quarterly dividend on November 21, 2013.

Gildan Activewear continues to implement strategies for growth. It recently acquired Doris Inc., North America’s third-largest branded ladies legwear marketer. Moreover, consolidated sales revenues increased by roughly 13% in its Q3 2014, versus Q3 2013. Consider this often overlooked industry and company for your income portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Michael Ugulini has no position in any stocks mentioned.

More on Investing

Utility, wind power
Energy Stocks

3 Clean Energy Stocks With Passive Income for 2023

These three clean energy stocks may be down now, but not for long, offering substantial returns and passive income for…

Read more »

Smiling diverse couple holding Christmas presents while walking through a winter forest

3 Dirt-Cheap TSX Stocks I’d Snatch Up Before the Holidays

Canadians should look to snatch up dirt-cheap TSX stocks like Park Lawn (TSX:PLC) and others before the holidays.

Read more »

eat food

Goodfood Stock Doubles Within Days: Time to Buy?

Goodfood (TSX:FOOD) stock has surged 125% in the last few weeks, so what happened, and should investors hop back on…

Read more »

A worker uses the cloud for paperless work. tech

Brookfield Asset Management Spin-Off: What Investors Need to Know

The current company is changing its name to Brookfield Corporation, and it will issue shares of a newly created asset…

Read more »

Investor wonders if it's safe to buy stocks now
Bank Stocks

Should You Buy CIBC Stock Now?

CIBC stock looks cheap. Is it a good buy today, or is more downside on the way?

Read more »

A meter measures energy use.
Dividend Stocks

3 Utility Stocks That Are Too Cheap to Ignore

Some utility stocks are priced too low to overlook. Here are three stellar options that every investor should consider buying…

Read more »

stock research, analyze data
Dividend Stocks

Rogers Stock Rose 10% in November: Is it a Buy Today?

Which is a better in the Canadian telecom sector: BCE or Rogers stock?

Read more »


Magna Stock Rose 9% in November: Is it a Buy Today?

Here's why Magna (TSX:MG) stock may be a solid bet in this difficult macroeconomic environment right now.

Read more »