On Thursday Tiffany (TIF) said earnings jumped 15% - the same day Costco (COST) said profits fell 5%. This is the great consumer divide in action, folks. Higher gas prices heading into this summer are dividing the “haves” from the “have nots”. How do you trade this phenomenon?
Jeff Macke explains consumers typically spend about 3% of their income on fuel. That means people who make less money will get hit harder by rising gas prices. He says gas sensitive retailers include Wal-Mart (WMT), Costco (COST) and Sears (SHLD).
Luxury retail, however are names that investors can own, Jeff adds. He likes Saks (SKS), Tiffany (TIF), Ralph Lauren (RL) and Coach (COH). Of the bunch Jeff likes Coach best.