Since the retail sector saw a wholesale rally in the last six months, mispricing in individual tickers has also been rampant. Updates in the ICR conference corrected some of them, with names like Express (NYSE:EXPR) correcting nearly 30%. And the next leg of correction will most certainly happen when companies report their earnings.
VF Corporation (NYSE:VFC), which is due to report early next month, is peculiar in that it did not overcorrect in 2017, but it did ride the rally that followed. After projecting its cash flows, I remain convinced that this was probably not justified. I, therefore, have a sell rating on this ticker.
Wrangler and Lee market share in the US has been stagnant
After a brief pause, the jeans market made a comeback last year and is expected to stay the course at a ~5% rate until 2021. With VF's rich growth estimates in some of the outdoor brands seeming probable, a comeback in jeans should have helped drive alpha in its billion-dollar denim business.
