What Happened?

Shares of children’s apparel manufacturer Carter’s (NYSE: CRI) jumped 4.4% in the afternoon session after it rose sympathy with other apparel retailers that reported strong quarterly results. 

The positive sentiment in the sector was sparked by department store chain Kohl's and teen clothing retailer Abercrombie & Fitch, both of which reported quarterly results that surpassed analysts' forecasts. Adding to the optimism, both companies also raised their full-year guidance, suggesting confidence in consumer spending on apparel. For instance, Abercrombie & Fitch cited robust demand for its Hollister brand's dresses and denim jeans. While there was no major news from Carter's, the upbeat reports from its peers likely created a positive spillover effect for the children's apparel company.

After the initial pop the shares cooled down to $28.20, up 4.8% from previous close.

Is now the time to buy Carter's? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Carter’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 15 days ago when the stock gained 3.2% on the news that the latest Consumer Price Index (CPI) report showed inflation holding steady, bolstering investor optimism for a potential interest rate cut by the Federal Reserve. 

The data, which revealed that inflation remained at 2.7% for the year ending in July, was seen as a positive sign by investors. This stability increases the likelihood that the Federal Reserve might lower interest rates at its upcoming September meeting. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates into higher consumer spending. This is particularly beneficial for the Consumer Discretionary sector, which includes companies selling non-essential goods and services like apparel, travel, and electronics.

Carter's is down 47.6% since the beginning of the year, and at $28.20 per share, it is trading 60.3% below its 52-week high of $71.04 from September 2024. Investors who bought $1,000 worth of Carter’s shares 5 years ago would now be looking at an investment worth $345.40.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.