A Closer Look At 3 Apparel Companies

Michael Kors Holdings Ltd KORS fell 8 percent on Tuesday after Credit Suisse analyst Christian Buss downgraded it from Outperform to Neutral and lowered the price target from $103.00 to $79.00.

So what are other options in the apparel industry?

Hanesbrands Inc. HBI

Over the fourth quarter of 2014, all of the ratings Hanesbrands received were positive: Credit Suisse gave it an Outperform, while Citigroup and UBS rated it with a Buy. These firms set respective price targets of $125, $126 and $127.

Related Link: Did Michael Kors Sell Out?

The stock returned more than 50 percent over the past year, and recently traded at $109.

Specialists have highlighted strong earnings, an ameliorating U.S. economy that should continue to drive top-line expansion, and an undervalued stock as some of the main reasons to invest in the company.

Gap

Firms have also become fond of Gap Inc GPS. Jefferies (Buy, $50 price target) and Susquehanna (Positive) recently upgraded the stock.

Jefferies analyst Randal J. Konik noted that "after a tough year, we remain constructive on retail stocks into 2015 as the macro environment transitions from a headwind to a tailwind for consumer demand, new managements in many instances catalyze product and brand improvement, margins benefit from lean inventories and cotton cost tailwinds and lower cap ex requirements accelerate FCF generation."

Specialists also pointed out the strength of Gaps' Old Navy brand and lower cotton input costs, which should help widen margins. However, some are concerned about the West Coast port slowdown.