Carter’s Inc., a recent purchase, is the largest branded marketer of baby and young children’s apparel. The company sells to department stores, national retail chains and specialty retailers, in addition to operating its own chain of retail stores. Carter’s and Oshkosh are its well recognized and trusted brands. The children’s apparel market is benefiting from three long-term trends: First, the number of children in the U.S. aged 0-9 years old is expected to grow5%over the next 5 years. 2 Second, parents are choosing to have kids later in life when they are earning higher incomes allowing them to spend more and earlier on their children. Third, the baby boom generation is spending more on their grandchildren than prior generations. The company should grow profits at a double digit rate and use excess cash to pay down debt to further strengthen its balance sheet. The stock sells at a reasonable valuation given its earnings growth potential, experienced management team and positive long-term investment outlook.
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