CNBC's Jim Cramer named six fashion and apparel stocks as potential buys on Monday, citing strength in the consumer sector as technology stocks struggle.
The SPDR S&P Retail ETF (XRT) gained 10% this quarter, while the Technology Select Sector SPDR Fund (XLK) fell 11%, according to Cramer. He said falling interest rates could boost apparel companies heading into holiday shopping.
Cramer's six picks are Ralph Lauren, Tapestry, Levi's, VF Corp, Kontoor Brands, and Reformation.
Ralph Lauren is Cramer's favorite apparel stock. The company has gained momentum in women's apparel, accessories, and outerwear, and has strengthened its international presence in Asia. Cramer is optimistic ahead of the company's earnings report Thursday morning.
Tapestry, the parent of Coach and Kate Spade, also reports Thursday. Coach's position in the accessible luxury market appeals to Cramer, particularly its popularity with younger female consumers. Shares have fallen 20% since August earnings, when guidance disappointed investors.
Levi Strauss shares fell below $20 after disappointing earnings but have since rebounded more than 20%. CEO Michelle Gass told Cramer the company moved quickly to address inventory shortages in popular styles. The stock trades at roughly 14 times earnings with a 2.8% dividend yield. "I think this is a good option to play the broader strength in denim that we keep hearing about," Cramer said.
VF Corp, which owns The North Face, Vans, and Timberland, shows signs of improvement. Cramer pointed to encouraging results from a recent Piper Sandler teen survey as evidence that Vans' turnaround is gaining traction. Shares have risen roughly 14% since Cramer recommended the stock two weeks ago.
Kontoor Brands plans to sell its Lee brand for up to $1 billion to focus on Wrangler and Helly Hansen. Cramer expects share repurchases to follow. Shares trade at roughly 14 times earnings with a dividend yield near 3%.
Reformation is Cramer's more speculative pick. The women's fashion brand struggled after its late July IPO but Cramer said it "has great growth, it's profitable, and it has a differentiated shopping experience with a technology kicker." Shares surged more than 31% in October after Cramer highlighted it in late September.