Retail Stocks: Bentz's Holiday Picks

Last month, star retail analyst Kristin Bentz shared her excellent framework for picking winners in retail for the holiday season. This morning Kristin followed up with her holiday picks as we head into door-busting Black Friday:

First, I want to note that Ann Taylor (ANN) is down over 10% since I raised a red flag about their discounts when we talked last month.

Also, Abercrombie & Fitch (ANF) management concurred with my analysis that Aeropastale (ARO) is taking market-share from them. Although the stock has risen on short covering in the short term, I think the expectations bar for ANF is slowly rising. As that happens, investors will become increasingly disappointed in the company’s performance. I don’t care how many stores they open in Milan if you can’t fix your business here in the US.

This is a shift in consumer behaviour for the teen market. ARO has now had 26 consecutive months of beating American Eagle Outfitters (AEO) and ANF in same store sales. Although, the beats are narrowing and that is something to watch. I believe that of all the teen players, ARO is the best positioned for the holidays in terms of pricing and inventory. Consumers will definitely look for the best deals out there. However, I am a bit cautious as their same store sales gains are contracting a bit.

At the moment, my pics for the holiday shopping season are Walmart (WMT), TJMaxx (TJX), Urban Outfitters (URBN), J. Crew (JCG), Nordstrom (JWN), and of course Apple (AAPL).

Disclosure: No positions/No Conflicts.

Comments

[Melinda Storer]

Nice post. I completely agree -I'm not an investor, so maybe someone who knows about retail investment can answer this question. Namely it seems that in Borders' case investors have been so willing to go without seeing a profit for so long, it almost seems like a form of welfare - the company's physical stock is worth so much more than its company stock. Does the fact the company hasnt been forced into bankruptcy mean that its investors see huge potential for profit in the long run and are willing to wait out years of possible losses, or is there some other factor that consumers/market spectators like myself are not seeing? They've cut personnel costs significantly, and are being squeezed by publishers who dont want to take back unsold inventory.
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Melinda Storer

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2009 Dec 29 02:11 PM