Hanesbrands Inc (HBI) – Buy

hanes-brands-logoThe price is quite cheap and the business prospects are still quite good. They have a solid competitive position in the apparel industry that will be hard for competitors to match. They own and control most of the production production process for their products and also sell products direct to consumers through  their stores. They are also increasing their e-commerce business.

It seems that many pure play retailers are at an increasing risk of being nonessential. With more consumers making purchases online and a few strong retailers such as Amazon.com and Walmart.com gaining more and more customers and getting increasingly aggressive with keeping costs down including shipping, it will be hard for other retailers to compete both Amazon and Walmart as well as others allow manufacturers to ship them product and they handle the orders and customer service. It seems that with this trend, most other retailers will not be needed and only necessary if they actually own their own products. Hanesbrands seems to be in a good position to sell direct and with their focus on vertical integration – controlling everything from product to sale to the consumer, and doing it well, they should be able to have better margins than their competitors.

The numbers look great too! A good dividend at current prices, low PE and PEG.

The recent price dip makes a great opportunity to get a piece of this strong company. I initiated a position today at $23.76/share. I will consider adding more if it continues to drop.

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