Steve Kernkraut – an analyst with hedge fund Berman Capital Management – talked with CNBC’s Bob Pisani about the retail sector this holiday season.
Wal-Mart is causing a ripple effect as it slashes prices on electronics, toys and other consumer products – forcing competitors to do the same. The winner of the price war: the consumer.
Federated Department Stores is dominating the department store space. They made a good move buying May. They’re a national enterprise that carries a variety of products and brands. The department stores is making a comeback. These stores are able to adapt to the consumer is ways specialty stores cannot.
Limited is another stock to watch, according to Kernkraut. Its Victoria’s Secret and Bath & Body Works are both dominating their markets.
Steer clear of home improvement and furniture stocks. Housing is trending downward--so look elsewhere for investment.
The answer to a perennial question: What do retail stocks lag during their best time of the year? Kernkraut says it’s because nobody knows if the consumer will show up. There are gift cards, an extra shopping day this year, the week after Christmas. The consumer usually does come through-but the numbers aren’t counted until after the season is over.
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