Morgan Keegan's Brad Stephens isn't waiting for the upcoming wave of retailers' earnings to pick his favorite stocks in the sector, but he cautions investors that they might be overpriced -- for the time being.
"Frankly, when we look at this, there's a couple of companies that can beat expectations, but they're priced as such," he told CNBC. "Our view is, take this run-up for four or five days since last Thursday, let the group sell off, and then buy into that."
So who's he talking about? Not the stores that will be reporting this week.
"It's not going to be pretty," he said. "They gave second-quarter guidance -- that their full-year guidance was predicated on the environment staying the same -- and frankly, since the tax-rebate checks ran out, it's gotten worse. We want to avoid the group a little bit, and buy Ralph Lauren, Warnaco, and Fossil on pullbacks."
Neither Stephens, his family, nor his firm owns shares in, or has any business relationship with, Ralph Lauren or Warnaco.
Stephens' firm expects to receive or intends to seek compensation for investment banking services from Fossil in the next three months.