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Winning stocks for December: Paul Hickey

Tuesday, 3 Dec 2013 | 6:34 PM ET
Holiday retailers lag: Pro
Tuesday, 3 Dec 2013 | 5:40 PM ET
Paul Hickey of Bespoke Investment Group says stocks such as Chipotle and Expedia have outperformed, while Best Buy and other names have lagged.

When looking for retail stocks that have historically outperformed in December, investors should look outside the big box, Paul Hickey of Bespoke Investment Group said Tuesday.

"Within retail you have some stocks outperformed, but they're not retailers that you'd associate with the holidays. Think Chipotle. Think Expedia, Genuine Parts and maybe Netflix," he said. "These stocks have all average gains of over 5 percent going back to 2000 or since they've been public and average positive returns three-quarters of the time, except Netflix."

Hickey said on CNBC's "Fast Money" that investors should not be putting money into big-box retailers.


Economic pressures on consumers: Pro
Gian Fulgoni of Comscore says discount retailers gained the most this holiday season.

(Read more: Mohamed El-Erian's 2014 playbook)

"The names you would traditionally think of with the holidays, they've actually lagged the market—Best Buy, Kohl's, Family Dollar and GameStop," he said. "All these stocks have averaged declines of 3 percent or more during the holidays, from Thanksgiving through Christmas, and lagged, only outperforming the market about a third of the time."

Tiffany was also on his list of historically underperforming retailers in December.

Sentiment often becomes overheated before what has been traditionally the busiest shopping day of the year, Hickey added.

(Read more: Bubble isn't here yet, Bob Doll says)

"Typically, every year we see this," he said. "Leading up to Black Friday, the retailers rally, and expectations always are too high. I don't remember a year where the Monday after Black Friday we think, 'Wow, that was much better than we thought it was going to be.' "

Hickey said that he was avoiding the retail sector except for a few select names, including FTD and Towers Watson.

(Read more: Stacking up retail's big weekend: Dixon)

"If you're a short-term, aggressive trader, those are names that we would focus on," he said. "If you're bullish on the overall market and you want exposure, these are the names you should focus on."

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

Trader disclosure: On Dec. 3, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" contributors: Paul Hickey's clients hold shares of FTD.

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CMG
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EXPE
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GPC
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NFLX
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BBY
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KSS
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FDO
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GME
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TW
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