The post-pandemic reopening discussion usually centers around travel-related companies such as cruise ships and airlines. One of the surprise booms has come from the apparel industry. According to industry data, consumers have been buying apparel at remarkable rates. One of the winners in this category may be Revolve Group (NYSE:RVLV), a fast growing online fashion retailer. RVLV stock represents a chance to invest in economic recovery.

It appears that consumers buying new summer clothes and office attire is starting to show up in the data. The stacked two-year revenue growth rate at clothing stores rose 13 percentage points to 36% in the middle of June. The two-year growth rate for apparel at department stores rose to 16%.

Data and Profit

Revolve has a unique story in the ecommerce space. It is a very-high-growth company, yet it is profitable and generates free cash flow. Even as the Covid-19 pandemic ravaged 2020, Revolve remained profitable. This differs from many relatively new commerce players who still report operating losses.

The company buys inventory in response to consumer signals. Its algorithms capture data in almost real time, which helps to minimize inventory risk. Revolve purchases small quantities across a broad range of products and place additional orders for the winners and products of similar styles based on data.

77% of Revolve’s net sales were at full price in 2020, despite meaningful Covid-19 headwinds, and the percentage of net sales at full price was even stronger in prior years — 79% of net sales at full price in both 2018 and 2019. This has helped Revolve maintain industry leading gross margins, which is a key driver for its profitability and strong free cash flow.

Revolve maintains a strong presence across all social media outlets. This inspires consumers and reinforces the company’s aspirational lifestyle brand image. This helps drive a highly impact, cost effective marketing effort and establishes that strong brand connection to its target customer.

Growth Engines for RVLV Stock

Revolve is still early in the cycle of adding new customers. Despite record growth, the company still has substantial room for growth in its segment.

The company has barely scratched the surface of international expansion. The Revolve brand has proven to resonate strongly around the world (in large part due to the highly impactful social media marketing, which knows no borders). In recent quarters they have delivered really strong growth in key international markets like Canada, China, Australia, the Middle East. They believe they are just getting started overseas.

The company can expand into other categories. Revolve has historically been known as an online destination where Millennial or Gen Z female consumers go to buy outfits for special occasions like concerts, travel, festivals and weddings. When Covid-19 hit (putting special events like weddings on pause), the team at Revolve was able to expand into complementary product categories that are less focused on going out like beauty, active and intimates.

These categories were critical during the pandemic. Beauty sales more than doubled during the first quarter of 2021, for example. The company believes it can continue to see traction in these categories even as the going out wear category has recovered strongly. In that sense, Covid-19 helped to accelerate the company’s longer-term strategies of serving customers across more aspects of everyday life.

RVLV Stock Valuation

RVLV stock is not cheap. The stock recently hit an all-time high and at a 2022 consensus price/earnings ratio of approximately 66. The company is well managed and is an e-commerce innovator. I believe the company has a great future and will make an prime acquisition candidate someday. However, jumping in and investing in this great company with the stock market at all time highs may require patience.

On the date of publication, Tom Kerr did not hold a position in any security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tom Kerr has worked in the financial services industry for over 25 years. Currently he is a Senior Portfolio Manager at Rocky Peak Capital Management. Prior to that he was Chief Investment Officer and Director of Research of SGL Investment Advisors, and has served in a number of positions at other investment related organizations. Mr. Kerr has also been a contributing writer to TheStreet.com, RagingBull.com and InvestorPlace.com. He’s a CFA charterholder and obtained a B.B.A in Finance from Texas Tech University.