This Online Apparel Stock Is a Marvelous Bargain

: SFIX | Stitch Fix, Inc. -  News, Ratings, and Charts

SFIX – Separating this online apparel stock from other online ‘box’ services is the fact it has been posting a profit each quarter since it went public two years ago. Continue reading to find out what it is, and what it could mean for the investor.

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

Stitch Fix (SFIX) sells a range of apparel, shoes, and accessories through its website and mobile app with an emphasis on customizing style and fit to each individual.

The business model of creating subscription services, which delivers everything from meals to plants to clothing, went from hot to not over the past few years as companies such as Blue Apron (APRN) found profitability to be elusive due to high customer acquisition costs and churn rates.

For starters, separating Stick Fix (SFIX)  from other online ‘box’ services is the fact it has been posting a profit each quarter since it went public two years ago.

In the latest quarter reported Octr 2, the company had revenue of $432 million, a 35% increase, and active clients grew 18% from a year earlier to 3.2 million.

But guidance for the fiscal first quarter ending Nov 2 was light, as the company expects recent success with lower-priced items and less spending on marketing to drag on revenue in the early part of the fiscal year and investors punished a stock that had already lost some 55% of its value over the prior 52-weeks.

Following the report, shares sank an additional 10% to a new 52-week low before mounting a recovery in recent days.

I think the stock is still a bargain and bears, a whopping 32% of the shares are sold short, are dead wrong and will be running for cover and licking their wounds in the coming months.

A key difference between Stitch Fix and other apparel companies is SFIX is approaching its business like a software company: analyzing cohorts, becoming smarter over time about how to acquire, retain, and monetize.

While investing in data science personnel and increasing its advertising expenses, SFIX has remained profitable for the past five years.

The company has improved its CRM strategy for a decade and has a clear first-mover advantage, thanks to its narrow industry focus.

Stitch Fix continues growing its revenue in a way not matched by any companies in the apparel industry, not even by best-of-breed Lululemon (LULU).

As you can see, revenue is growth is accelerating at a rapid rate:

The market opportunity isn’t petite: Stitch Fix pegs its addressable market in the U.S. and U.K. at $431 billion. Still, competition is intensifying, particularly from the likes of Amazon (AMZN)  which has launched a try-before-you-buy Prime Wardrobe platform thru a service called Personal Shopper in late July for women. The list of other competing services includes Trunk Club and plus-size Dia & Co, among others.

I view the competition as confirmation that the direct to consumer, and customized clothing not a fad but will increasingly be a way that people replenish and freshen their wardrobe.

The stock’s recent drop-off offered “one of the best risk/reward opportunities” in small-to-mid-cap internet.


SFIX shares were trading at $21.75 per share on Wednesday afternoon, up $0.90 (+4.32%). Year-to-date, SFIX has gained 27.27%, versus a 20.96% rise in the benchmark S&P 500 index during the same period.


About the Author: Option Sensei


Steve has more than 30 years of investment experience with an expertise in options trading. He’s written for TheStreet.com, Minyanville and currently for Option Sensei. Learn more about Steve’s background, along with links to his most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SFIXGet RatingGet RatingGet Rating

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!


Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Do NOT Buy Stocks Before the Election!

The 2 months coming into a Presidential election are traditionally rough for the stock market (SPY). The great uncertainty leads to a selloff that begets a rally after the election is finalized. But if the increase in write in ballots delays election results, then you can imagine how much more uncertainty there will be...and how much worse that is for the market.

:  |  News, Ratings, and Charts

Should You Buy Palantir’s Direct Listing?

Palantir (PLTR) is a highly anticipated startup that creates software to help governments and businesses find insights out of large data sets. The stock shares some characteristics with recent big IPO winners like high growth, margins, and annual recurring revenue.


:  |  News, Ratings, and Charts

2 Election Stocks for a Biden Win and 2 for a Trump Win

The first presidential debate is tonight and while the debate itself isn't likely to move markets, we do need to start considering stocks that would benefit under each candidate. Here are two stocks that should benefit from a Biden win, Tesla (TSLA) and UnitedHealth (UNH), and two that should benefit from a Trump win, Northrop Grumman (NOC) and Exxon Mobil (XOM).

:  |  News, Ratings, and Charts

Should You Buy the Asana Direct Listing?

Asana (ASAN) is going public with a direct listing. The company builds workplace collaboration tools that are growing in popularity. It has 2/3 of the Fortune 500 companies using its product, and it has a successful track record of monetizing users.

:  |  News, Ratings, and Charts

2 Election Stocks for a Biden Win and 2 for a Trump Win

The first presidential debate is tonight and while the debate itself isn't likely to move markets, we do need to start considering stocks that would benefit under each candidate. Here are two stocks that should benefit from a Biden win, Tesla (TSLA) and UnitedHealth (UNH), and two that should benefit from a Trump win, Northrop Grumman (NOC) and Exxon Mobil (XOM).

Read More Stories

More Stitch Fix, Inc. - (SFIX) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SFIX News