You already know most of the best companies are those that provide essential products and services rather than flash and cutting-edge tech.

Not only does our pick today manage a wide range of essentials, but this name-brand company offers a dividend yield three times the industry average.

But in case that’s not enough, this dividend stock also has a top score from our Money Morning Stock VQScore™ system.

Based on one valuation metric, you could grab 150% gains if you get it now.

We’re talking about an apparel company that’s been around for 118 years, weathering two world wars, the Great Depression, and more market crashes than we can count.

Maybe that’s why it’s so easy to take this stock for granted, allowing it to slip under the market’s radar.

Either way, Wall Street’s mistake is our gain.

This Company’s Leading Market Share Could Bring 150% Gains

Based in Winston-Salem, Hanesbrands Inc. (NYSE: HBI) was founded in 1901 and has been a leader in clothing essentials for decades.

The company has a No. 1 or No. 2 market share in at least one clothing segment in 12 different countries. That includes a leading share in the U.S. in men’s and kids’ underwear, socks, hosiery, and t-shirts. It’s also No. 1 in men’s underwear in Mexico, France, Australia, Spain, New Zealand, and the Philippines.

In addition to the familiar Hanes brand, the company also owns Champion, Playtex, L’eggs, Barely There, and a number of other popular lines.

While the company has grown into an S&P 500 behemoth with nearly 70,000 employees in 45 countries, it has managed to maintain the values it was built on. Rather than contract its manufacturing processes out to operations with questionable business practices, for example, Hanesbrands manufactures more than 90% of its apparel in house.

The company’s commitment to socially responsible production earned it an A- grade – the best in its industry – by the 2018 CDP Climate Change Report. That followed a 10-year period in which Hanesbrands achieved 21% energy reduction, 28% fewer carbon emissions, 30% less water used, and an 84% diversion rate (i.e., waste that doesn’t go into a landfill).

That’s a critical factor in the company’s fastest-growing segment: activewear.

The younger generation of consumers buying athletic clothing places a high priority on the kind of good stewardship Hanesbrands has consistently demonstrated.

U.S. per capita consumption of activewear grew by an impressive 46% between 2011 and 2017, according to research firm NPD Group.

Beyond activewear, two other factors are driving growth for Hanesbrands: global expansion and consumer-directed business.

In 2017, the company earned $2.1 billion in international sales, up from $500,000 in 2013. International sales now account for 32% of sales overall, almost triple what it was four years earlier.

Equally important is consumer-directed, rather than wholesale, business. Apparel companies that haven’t been able to pull this off have been sinking in the Internet age, but Hanesbrands has managed to boost consumer-directed business from $400,000 in 2013 to $1.4 billion in 2017. The percentage of sales coming from these efforts has risen in that time from 9% to 21%.

This is the kind of adaptation that has kept this company in business for over a hundred years and will continue to keep it a market leader for years to come.

And on top of it all, the stock’s indicators suggest it’s available at a steal right now…

Now Is the Time to Buy HBI

After a rough 2018, HBI has been on the rise since Christmas – to the tune of 64%. But there’s still plenty of room to grow from there.

Hanesbrands sales have risen every year going back to 2009, with a five-year compound annual growth rate (CAGR) of 8%. In spite of a weak 2017, net income jumped sharply from red to black in 2018 and is growing at a 10-year CAGR of 15.8%. Net change in cash also jumped from a loss of $38 million in 2017 to a positive $34 million.

And according to FactSet, earnings per share (EPS) is projected to rise through 2022.

A big key here is that Hanesbrands was able to pay down much of its debt near the end 2018, positioning it for unimpeded growth in the years ahead.

In addition to its growth prospects, HBI pays a $0.60 dividend. That’s a yield of 3.1%, with a payout ratio of just 39.5% – meaning it should be safe going forward.

No wonder its average analyst rating is a “Buy” according to FactSet. Buckingham Research has set a price target 30.7% higher than its current price, and Morningstar Equity Research’s target would represent a 41.1% rise.

But these estimates may not be giving Hanesbrands enough credit. The stock’s price/earnings (P/E) ratio for the next 12 months comes in at just 49% of the industry average, and the P/E ratio for the last 12 months is just 38% of the average.

That projects to a 163% gain for HBI to be valued fairly compared to its peers.

Between a handsome dividend, strong tradition, must-have products, great growth prospects, and an undervalued share price, it’s hard to find a reason not to buy HBI.

Get it now while it’s still available at a great price.

— Stephen Mack

Source: Money Morning