As a multiple of forward earnings, shares of Lululemon are now trading at roughly where they were before the pandemic, while Levi’s is trading at higher levels. Is the denim business suddenly more promising today than it was before Covid-19? Apparel companies certainly think so. Levi Strauss, in its recent earnings call, said it was seeing the start of a new denim cycle—away from skinny jeans to a high-rise, looser fit. The thinking is that as consumers start resuming normal life, they will find their older wardrobe of tightfitting jeans in need of an upgrade.

Another reason investors are bullish is that denim is seen as the perfect bridge from the comfortable clothes consumers got used to while staying home and the dressier outfits they used to wear, according to Jay Sole, analyst at UBS.

Yet that still doesn’t seem to be enough of a reason to jump onto the Levi’s bandwagon—at least not yet. While interest in the new denim fit is undeniably there, it is trickier to forecast exactly which brand consumers will turn to. The skinny-jean cycle, which Levi’s referenced in the same earnings call, kicked off around 2005. While the popularity of that new fit might have helped boost denim sales overall, it did little to help Levi’s expand sales at the time.

This cycle might be different; Levi’s could do better precisely because it is known and sought for its classic styles, which happen to match what customers currently want.

Levi’s noted in its earnings call that men’s relaxed fits, which the company once thought of discontinuing because they were becoming so unpopular, grew 50% in the most recent quarter compared with a year earlier. But other apparel brands are betting on the trend too, so it is not obvious that Levi’s will be the clear winner.

And despite talk of a new denim cycle, skinny jeans still endure in popularity—they made up the largest share of women’s jeans sales at roughly 34% for the 12 months ended in February, according to data from the NPD Group. That could go both ways—it could presage a huge boom in new denim sales if many in that 34% segment need to switch up their wardrobes. Conversely, it could mean skinny jeans have staying power alongside wider fits.

Fashion trends can be fickle, and companies can always adjust to new fads. With that in mind, it is important to gauge a brand’s relative record. Mr. Sole notes that denim sales have been growing by low-single-digit percentages in recent years, while sportswear has grown in the middle single digits. Levi’s is one of the most recognizable apparel brand names, but the company’s sales growth hasn’t exactly stood out from the crowd. Before the pandemic, its five-year compound average growth rate for revenue was 3.9%, roughly in line with the industry. Meanwhile, Lululemon is a category unto its own: Its average annual growth rate over the comparable period was 17%, well above the sportswear category’s average and more than double that of

Nike.

After growing almost 11% in the past fiscal year, Lululemon expects to see its top line increase another 26% at the low end of its forecast, which it tends to outperform.

While the new denim trend is certainly eye-catching, for investors it is no time to ditch Lululemon in favor of Levi’s.

Write to Jinjoo Lee at jinjoo.lee@wsj.com