investing

The Best Stock in North Carolina: Hanesbrands

We analyzed publicly traded companies based in the Tar Heel State to identify the best stock in North Carolina to buy now.

We scoured the nation to identify the best stock in every state. Hanesbrands (symbol HBI) is the publicly traded company we picked in North Carolina. The company headquarters is located in Winston-Salem.

A word of caution: Since we selected a single stock from each state (plus one from D.C), and choices in some states are sparse, a few of our picks are best suited to investors comfortable with a higher degree of risk. This is not necessarily one of our 51 favorite stocks in the entire U.S., in other words.

Hanesbrands by the Numbers

  • Headquarters: Winston-Salem
  • Share price: $22.25
  • Market value: $8.1 billion
  • Price-earnings ratio: 11

(Prices and data are as of June 22, 2017)

Known for brands such as Hanes, Champion, Playtex and Maidenform, Hanesbrands manufactures and sells undergarments, as well as activewear, and sporting and intimate apparel.

In recent years, the company’s mantra has been “sell more, spend less, generate cash.” With growth stagnating among its core undergarment brands, Hanes has found ways to sell more through acquisition. Three foreign companies Hanes acquired last year – Champion Europe, Champion Japan and Pacific Brands – are expected to add $420 million to revenues this year. Amplifying the “spend less” and “generate cash” themes is the recently announced Project Booster, a pledge to generate $100 million in annual cost savings and $300 million per year in additional cash from operations by 2020. Unlike most clothing companies, Hanes primarily operates its own manufacturing facilities, which means acquisitions can be cheaply and efficiently incorporated into its business, and the company has done a good job of harnessing acquisitions to drive earnings growth, says Morningstar analyst Bridget Weishaar. She adds that temporary factors – such as last year’s industrywide lag in sales of basic apparel, including underwear, T-shirts and socks – have knocked down the stock, creating an opportunity for investors to buy shares on the cheap. Morningstar’s $34 “fair value” estimate implies an increase in the stock price of more than 50%. And investors receive a generous dividend. The company hiked its payout by 36% in March; the stock yields 2.7%.

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