Est. 150bps Ebitda margin improvement for H&M in next 3 yrs, Inditex unchanged

Inditex has benefited from online sales introductions; H&M recent start of Internet sales in U.S. may be “game changer”

Both may benefit from possible improvement in European consumer

Eoin Treacy's view Clothing companies such as H&M and Inditex represent the epitome of globalisation; combining the lowest possible cost of manufacturing with powerful marketing and design businesses. As demand for cheap fashion increases globally, they represent some of the companies most likely to continue to benefit.

H&M (Est. P/E 23.52, DY 3.9%) hit a medium-term peak in 2010 near SEK260 and continues to range below it. The share has rallied since late June to retest the upper side of its range, but a sustained move above SEK260 will be required to confirm a return to medium-term demand dominance.

Inditex (Est. P/E 23.75, DY 1.9%) hit a medium-term peak near €110 in December and while it has held the majority of the earlier impressive advance, the most likely scenario involves a good deal of ranging as a process of valuation contraction takes place.

Shenzhou international (Est., P/E 14.23, DY 1.98%) counts Adidas among its customers but Japan represents 30% of revenues. The share pulled back sharply in June but found support in the region of the 200-day MA and a sustained move below it would be required to question medium-term upside potential