Let's start by getting this out of the way -- Hanesbrands (HBI 2.75%) is probably not the most interesting company that you've ever come across. Its primary business is basic apparel, making things like underwear, undershirts, and socks.

But what is interesting is its 4.7% dividend payout, the attractive valuation it trades at, and some underappreciated growth drivers.

People wearing activewear.

Image source: Getty Images.

A stock that can weather this market

Shares of Hanesbrands are down nearly 40% from their 52-week high and about 10% over the past month as investors wring their hands over supply-chain issues, commodity inflation taking a bite out of Hanesbrands' bottom line, and inflation curtailing consumer demand.

The stock sold off after Hanesbrands discussed these issues on its May earnings call. But Hanesbrands is actually relatively well-positioned for the current market -- even at a time when analysts fear that discretionary spending is taking a hit, purchases like socks and underwear are essentials. Someone may put off the purchase of a new watch or purse based on the economy, but consumers are going to keep buying socks and boxer shorts.

Even though Hanesbrands acknowledged it's facing these challenges, the stock still beat Wall Street estimates on the top and bottom line and reaffirmed its full-year guidance. CEO Steve Bratspies is still confident that the company can hit the financial goals it outlined at last year's investor day, including hitting $8 billion in revenue.

Hanesbrands started in 1901 and has a longstanding reputation for quality . The company has become synonymous with categories like socks and undergarments and is recognized as an industry leader, so it has the name recognition that consumers will pay slightly more for in order to feel confident they are making a quality purchase.

Hanesbrands should accordingly have pricing power if it needs to increase prices to protect its margins when costs are rising. According to market research firm NPD, Hanesbrands is the market share leader for underwear in the United States, Canada, and Australia, so the company's quality and brand recognition are durable advantages.

Valuation and returns to shareholders

Hanesbrands trades at an undemanding P/E multiple of 9 times earnings, and an even lower 7 times next year's earnings, with earnings projected to increase. Its price-to-sales ratio is just over 0.6, meaning that the entire company is valued at just about 60% of the revenue it will bring in this year. Moreover, Hanesbrands pays shareholders a compelling dividend yield of 4.7% at current prices.

A Champion mindset

Hanesbrands also has a bit more of an interesting profile than it is often given credit for -- it owns the popular Champion brand, which has experienced a resurgence over the last several years. This is a fast-growing part of the company, and management is targeting $3.2 billion in annual sales for Champion by 2024, up from $2 billion in 2021.

The company wants to continue to build on the momentum that Champion has built in North America and Europe, while raising the profile of the brand in markets like China, South Korea, and Japan. Furthermore, Champion wants to increase its popularity with female consumers, launching its "Win with Women" campaign in March, which celebrates female athletes.

Champion now has over five million followers on Instagram (up from just 200,000 in 2016) and is staying in vogue with younger consumers by collaborating with up-and-coming designers and streetwear brands. For example, in April, Champion launched a well-received collection with Carrots, a streetwear brand run by designer Anwar Carrots, with popular Bay Area rap artist Larry June modeling the collection. Champion has also collaborated with NYC streetwear brands like Kith and Supreme that have large, fanatical fan bases.

In addition to pushing Champion forward, Hanesbrands also wants to expand its nameplate brand's influence and market share in the fast-growing activewear category.

Is Hanesbrands a buy?

Hanesbrands looks like a buy. The company's shares trade at an attractive valuation and pay out a significant dividend. Demand for the company's products should remain resilient even in an inflationary market or deteriorating economy. The market is also underappreciating the success of the Champion brand as a significant growth driver for the company.