Motley Fool: Under and over wear

There’s a lot to like about Hanesbrands (NYSE: HBI). For starters, it owns a portfolio of familiar brands, such as Hanes, Champion, Maidenform, Bali, Playtex, L’eggs and Wonderbra. It’s a top apparel brand in the U.S., and has the benefit of operating most of its own manufacturing facilities – unlike many of its rivals, which contract out for such work.

The company has been hurt by the pandemic, with many of its sales channels closed or ailing, though its mass-merchant channels such as Walmart and Target remained operational even during lockdown. Hanesbrands had already been struggling prepandemic with a soft innerwear market, and it carries significant debt (about $4 billion), far eclipsing its cash.

The news is not all bad, though, due in large part to its Champion activewear unit, which is performing well. In addition, Hanesbrands has a new business that’s specifically pandemic-related: It began making protective face masks and gowns for the federal government, delivering more than 450 million masks and 20 million medical gowns on time. It’s also making face masks for consumers, large organizations and business-to-business customers, and this new business doesn’t look like it’s going away anytime soon.

Hanesbrands stock may not double or triple in the near future, but it’s positioned to reward long-term investors over time. Its dividend, recently yielding 3.5%, is a bonus.

Ask the Fool

Q. How do mutual funds work, exactly? – G.S., Madison, Alabama

A. In a nutshell, a mutual fund receives money from many investors and then professional managers choose how to invest it, for a fee. Mutual funds are a great solution for those of us who don’t have the time, skill or interest to study the universe of investments and make “buy” and “sell” decisions repeatedly over long periods.

Mutual funds come in a wide variety, with some focused solely on one kind of asset, such as stocks or bonds, and some investing across several asset classes. Within the stock-fund world, funds might focus on large, medium or small companies; dividend-paying companies; fast-growing companies; or undervalued companies. Some specialize in particular industries, such as energy, health care or financial services, or regions, such as Europe, Latin America or Asia.

Fees vary widely by fund, and it’s well worth minimizing the fees you pay so you can maximize the growth of your money. One way is to stick with low-fee, broad-market index funds, such as those that track the S&P 500 index, or the entire U.S. or world stock markets. Those tend to have ultralow fees, are easy to get in or out of, pay dividends and often outperform more actively managed funds with higher fees.

Learn more about mutual funds at Fool.com/investing/how-to-invest and research individual funds at Morningstar.com/funds.

Q. Can you explain what “profit-taking” is? – C.N., Tea, South Dakota

A. It’s a fancy way of referring to selling investments for a gain. If many investors are selling out of a stock after it has run up a lot, the selling will depress the stock a bit, and you might hear that the share price is down because of profit-taking.

My smartest investment

My smartest investment has been my education. After all, education is the one thing that can’t be taken away from you. – S.C., online

The Fool responds: With college costs having soared in recent decades, some have come to question the value of higher education, arguing that massive student-loan debt isn’t worth it, and that many jobs don’t require college degrees. On the other hand, various studies show that those with college degrees earn more, on average, than those without. A recent study by the Federal Reserve Bank of New York cited a “college wage premium” of nearly 75%, with the average college grad (with just a bachelor’s degree) earning roughly $78,000 annually, compared with $45,000 for someone with only a high-school diploma.

That said, there are other factors to consider, such as what you study, because the major and profession you choose will make a big difference. Doing well in school can lead to better job prospects, and the school that you go to can matter, too. It’s worth studying colleges and careers before sending in any applications – favor schools, degrees and careers that are likely to be satisfying and that pay you enough to live on. Keep student-loan debt to a minimum by seeking out and applying for scholarships and financial aid – there’s more help out there than many people realize. For best results, keep learning throughout your life.