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Cramer Backs Apparel Stocks Amid AI Slump
16 Oct
Summary
- Cramer recommends VF Corp and Kontoor Brands beyond the AI trade.
- Analyst upgrades cite potential turnarounds for Vans and Wrangler.
- Depressed valuations offer buying opportunities in both stocks.
Jim Cramer has identified VF Corp and Kontoor Brands as potential investment opportunities for those looking to diversify from the current AI trade. He noted that rising interest rates and oil prices typically pressure consumer stocks, but VF Corp and Kontoor have already seen significant declines, trading at depressed valuations that he believes already account for the economic environment.
New analyst research suggests shifting fashion trends could revitalize both companies. Piper Sandler and Truist have upgraded VF Corp to 'buy,' with price targets implying upside. These upgrades are partly based on teen survey data indicating growing interest in non-athletic footwear, which could stabilize Vans' declining sales. The North Face and Timberland have also shown stronger performance.
For Kontoor Brands, Jefferies upgraded the stock to 'buy,' citing a potential lasting resurgence in denim popularity, benefiting the Wrangler brand. Kontoor's planned share repurchase program and the acquisition of Helly Hansen are also seen as positive catalysts. Cramer views Kontoor as an attractive way to invest in denim's revival at a reasonable valuation, especially as the company plans to sell its Lee brand.
