In this era of e-commerce and fast fashion, the apparel business is not an easy place to turn a consistent profit or achieve rapid growth -- two issues that have pained investors in the space over the years. But that didn't stem the market's enthusiasm when the original denim dynamo Levi Strauss (LEVI 2.18%) went public last month. Then on Wednesday, it delivered its first post-IPO earnings report, and the company's 7% revenue growth and steady guidance fueled another burst of optimism.

In this segment from MarketFoolery, host Chris Hill and analyst Emily Flippen talk about how they view Levi's as a business -- and as an investment.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

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This video was recorded on April 10, 2019.

Chris Hill: Just a few weeks ago, Levi Strauss went public. This morning, Levi's came out with their first earnings report. First-quarter revenue came in 7% higher than a year ago. You looked at the report, what'd you think?

Emily Flippen: I was surprised, I'm not going to lie. I was a little bit skeptical when Levi's went public. I immediately thought, this is going to be a short-term pop situation, and then people are going to remember that they sell jeans.

Hill: [laughs] They're not bad!

Flippen: They're not bad jeans, not at all. And it's not a poorly managed company at all. But ultimately, they're still a clothing retailer. We've seen the market really punish these types of businesses over the past few years. So, 7% revenue growth was much better than I personally expected. The company reiterated their previous guidance.

But if I'm honest, I'm still not excited about 7% revenue growth. Maybe that's because I invest more in high-growth companies. But at the price that they're trading at today, it's clear that people expect great things from Levi's. That's not to say that they won't be able to deliver on them. Seven percent revenue growth, like I said, for this industry, is amazing. But it is to say that the expectations are high. There's not a lot of room for Levi's to trip up here.

Hill: Let's go back to market caps for a second. JetBlue has a market cap of around $5 billion. Levi's goes public at $17 a share on opening day, it pops to $22. It's up a little bit on this report. I think now it's $23 a share. It has a market cap of $9 billion. And that's the thing that I focus on when I look at this. Again, they make a good product. They do a good job managing this business. It's hard for me to say that I really like this stock where it is because I look at them and just think, "You've just come public, it's a $9 billion valuation, which really seems pricey to me." This is absolutely an example of, I want to see a couple of more quarters of them in the public markets before I put this stock on my watchlist.

Flippen: Exactly. I'd want to see their ability to continue to deliver on those types of numbers. Right now, they're trading for a price of sales of about seven times. Essentially, if you buy the stock today, you're paying a price that is seven times the sales per share that the company has. That's significant because the average in the industry is less than one for clothing retailers. That's not to say, like I said, that Levi's is average. Admittedly, it's probably a company that does deserve a bit of a premium. If any clothier has growth ahead of it, it's Levi's. But it's not to say that it's a cheap company at this point.

Hill: Well, and you look at the apparel retail space, pretty much every company at some point in time has put together a good 12 months. By a good 12 months, I mean a 12-month span where shareholders were rewarded. Whatever the long-term performance of companies like Gap or American Eagle or Abercrombie & Fitch, you can find a one-year period where, boy, that was a great time to own that stock. But over the long term, it's a really tough business. It's hard to feel like any of those stocks are ones that you would not have on a short leash.

Flippen: Yeah, exactly. But every single time I've made that comment, those companies have turned around and performed wonderfully. So I've become a little bit hesitant in feeling confident about the cyclicality of certain industries, retail being one of them.