Polo Ralph Lauren Corp. (RL)

Is up 25% this year, but has recently pulled back from highs. He's long owned it. Over 4 years, RL has rallied 280%, beating the S&P's 77%. Earnings have doubled the past 3 fiscal year, and boasts 17% same-store sales growth. But rising inflation is making the market worry about the consumer. Today, the Fed chief was not tough on inflation, which triggered a market sell-off. But don't sell RL based on macro reasons. RL has been positioning itself as a luxury brand to protect it from swings in the wider economy. RL has more pricer power than ever which translates to wider margins. RL is making a big push into direct-to-consumer sales and expanding into accessories and to younger consumers. Buy ahead of earnings.

Buys back a lot of shares, reducing shares by 31% since end-2015. Shares have tracked the S&P in that period, but RL is up nearly 60% this year while consumer stocks are sinking. Team USA will wear RL gear at the Olympics.

Is up 32% this year in a tricky year for apparel stocks. The stock has ripped since Taylor Swift announced her engagement (her and fiance were wearing RL). But Wall Street didn't love RL's investor day yesterday, falling 2.7% today. The new financial targets look disappointing, but RL promised steady margin expansion. Their share buyback plan is on schedule. More important is their plan to achieve growth: better marketing and customer retention, focusing on areas like menswear and women's outerwear; focusing on key cities to grow, and Asian strategy (key area of growth). The targets were not stunning, but still impressive and attainable. Trades at only 20x PE, despite a big run this year. RL should be trading a premium vs. the S&P. He remains bullish.

They have tremendous designs. Has owned their clothes for a long time.

Management indicates stronger sales in China, full-year up 20% and Q4 up 40%. A great story in China.