Gildan Activewear (TSX: GIL) stock has been one of those stealthy market outperformers that Canadian investors really should give more attention to. Undoubtedly, if you haven’t kept up with the name in recent years, it may come as a bit of a shock to learn shares of the clothing company are up more than 230% in the last five years. With GIL stock recently correcting by close to 27% from peak to trough before partially recovering nearly half the ground, the post-plunge rally would have been even more astounding (a 270% gain before the dip of spring 2025).
The big question going into 2025’s second half is whether the maker of essential clothing items still has more gas left in the tank to revisit or even break through prior all-time highs just shy of the $80 per-share level. Of course, the valuation still looks quite appealing, with the name trading at 18.7 times trailing price-to-earnings (P/E). And with a nice, nearly 2% dividend yield to go, it certainly seems like a great time to be a net buyer of GIL shares on weakness. That said, the $10 billion clothing company isn’t without its own fair share of headwinds as the economic climate looks to get a bit chillier in the second half.
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Gildan has a pretty wide moat.
Recently, Gildan’s top boss remarked on the company’s “strong competitive advantage,” even in the face of Trump’s tariff threats. Undoubtedly, tariffs are a huge thorn in the side of many firms. And while Gildan is, by no means, immune to such levies, I do think the popular maker of custom tees is ready to dodge and weave past the worst of tariffs. Arguably, it’s Gildan’s operational excellence that could allow it to gain ground over some of its peers in the apparel scene.
Furthermore, Gildan doesn’t exactly make premium-branded merchandise. Indeed, its durable competitive edge (or source of economic moat) lies in its lower costs of production on various “basic” clothing items (think t-shirts, crews, and all the sort). As the economy sinks a bit, I do think that the tides could move in favour of the lower-cost apparel producers. And with that, Gildan looks to be a tad more recession-resilient than most other apparel makers that fly on your radar, at least in my opinion. In any case, a tariff-driven downturn, I think, could be less harsh on Gildan.
Perhaps the company’s CEO, Glenn Chamandy, put it best: “We’re in a great position to take share.”
Time to buy?
So, does Gildan’s tariff resilience make it a great buy at around $65 and change per share?
I certainly think so. The stock’s still cheap and recent momentum, I think, could persist for more than a year. The latest first-quarter results were fairly decent. And with management continuing to push forward despite the tariff disruptions, I see few reasons to take profits on a proven market beater that has all the right growth drivers and one of the best management teams in the entire apparel space. Indeed, apparel’s in a tough spot right now, but Gildan is still feeling the wind at its back.
