Gildan Activewear, Inc. (USA) (GIL)

This account tracks the performance of newly minted 4 star stocks - 3 star stocks that recently turned in to 4 star stocks.

risks overblown, capturing market share with major retailers

Cheap T-Shirt maker .... I will go long ...

Jared

Classic Lynchian Company. They produce very basic apparel. A quick perusal of their web site shows t-shirts, sweat pants and other boring necessities of American life.
They are trading at a PEG of 0.57. Enterprise value to Shareholder value is less than 2. Quick and Current ratios are both close to 4.
Why's this stock so beaten down? It's the general malaise of the market. In a five year outlook, either this is a five bagger, or the economy will be in a Japanese style long-term recession.

This stodk is in the consumer cyclical sector of the market and in the apparel industry which means that at this time of the year people are out looking for new apparel for the family which makes this a good stock.

This company is one of 62 listed on the BetterInvesting Growth Screen in January 2008. It met 4 criteria: it is projected by Value Line to double earnings in the next five years, has actually doubled earnings in the past 5 years, is selling at price-earnings multiples (P/E’s) that are 110 percent or less of Value Line’s projected earnings growth rate and has a safety rating of average or better. It was listed in the March 2008 BetterInvesting magazine.

This is due for a correction, based on the recent downturn of the stock.

Experiment time... I will pick whatever stocks that are on the cold 5 star list on the last trading day of each month. There is no research involved other what is on the cold 5 star list at the end of each month. Each pick will be for one year. Lets see where this goes...

Industry leader

might be re-thinking this one...

This is another chart pick. 50 DMA rising past 200 DMA.

Super 1st Qtr earnings, rising earnings guidance and in a boring and necessary industry of undies, socks and T shirts.

A bit more debt than I would want to see, but I'm going to let it ride for a year and see what they do with those incresed earnings.

has done very well can it keep going

Whether it's underwear, t-shirts or other types of active wear, Gildan consistently provides a quality product.

Week #1 - Thursday: 'Stock Pick of the Day'

Over the past 10 years, Gildan has made savvy big-picture decisions. Firstly taking their manufacturing outside of Canada was very timely, then they made the same decision with regards to Mexico. Their current foray into the socks/hosiery market is something to watch as there are few players in this market having as much leverage (due to their dominance in the blank t-shirt market).

Everyone knows Wal-mart is expanding quickly into international markets like China. Now there is an opportunity to play off of their expansion that is little followed in the US.

Gildan Activewear (GIL):

Gildan makes sportswear and basic apparel products. Meaning t-shirts, tank tops, sweatshirts, golf shirts, socks, underwear, etc. They distribute much of their merchandise through Wal-mart. Or orders for imprinted clothing (have a golf shirt with a stitched corporate logo?) Gildan is also North America's market leader in screen-printing. The company is out of Montreal, Canada.

Recently the company purchased a sock manufacturer that increased its sales and bottom line dramatically. The management team, though their quarterly report believes growth comes from:

? continued use of activewear for event merchandising (such as concerts, festivals, etc.);

? continued evolution of the entertainment/sports licensing and merchandising businesses;

? the growing use of activewear for uniform applications;

? the growing use of activewear for corporate promotions;

? continued increase in use of activewear products for travel and tourism;

? an increased emphasis on physical fitness; and

? a greater use and acceptance of casual dress in the workplace.

Current market penetration is increasing with solid market share positions. (Russell, Fruit of the Loom, and VFC are its biggest competitors).

Gildan Market Share:

Q3 07 Q3 06

All products 47.6% 43.6%

T-shirts 48.3% 44.5%

Fleece 42.2% 32.3%

Sport shirts 34.0% 32.7%

Sales and revenues are growing. ROA is at 12.82% for the past 12 months and ROE is at 18.67%. While trailing PE is a concern for some quarterly earnings growth is over 22% and gross margins for the past 9 months were at 32%!

Currently the company is reorganizing from corporate acquisitions and consolidating/relocating/modernizing facilities. I received an e-mail from Sophie Argiriou, Director of Investor Communications, which stated: "...during the course of fiscal 2007 are expected to contribute in excess of U.S. $0.30 per share year-over-year EPS growth...." Efficiencies and consolidation will help retail market penetration.

While the company will see some drops in EPS due to restructuring and consolidation the future EPS following the changes should be dramatic and garner significant revenue increases. So long as the company stays in its niche its growth and earnings look very sound. Technically the price is a bit high but averaging in would be well worth it to avoid missing continued growth especially with only 400k shares typically traded.

Revenues should continue to do well as the US dollar drops and exchange rates add bit to the bottom line but watching the Dollar/Canadian Dollar changes would be prudent.

Pullbacks under $40/share provide good opportunities. 15-20% return over the 6-12 month period is quite plausible.

____________

Disclosure:

Long Gildan Activewear at time of posting at a price of $33.50.

Not to be construed as professional advice. Consult a professional to review your personal situation.

Can't beat a Shirt and sock co....who doesn't need these???

Needs to cool off. Price is based on a lot of "ifs". Fighting the trend here, but I am betting on a skeptical market.

let the competition thrive, im always down for a sweeter set of boxers.