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Best Back-to-School Retail Picks: Analyst

Retailers are gearing up earlier than usual for the back-to-school season and analyst Jeff Klinefelter at Piper Jaffray and Ellen Davis, senior director at National Retail Federation, discussed the outlook for the industry.

“It’s going to be difficult—that’s no surprise,” Davis told CNBC. “People are going to be spending about $550 on back-to-school compared to about $600 last year so the average family is going to cut down about 8 percent and as a result, retailers are cutting back on inventories as well.”

Davis said there is deflation happening in the retail sector right now, particularly in the clothing and electronic areas.

“We’re expecting some parents to postpone the cooler-weather purchases until later in the fall,” she said.

In the meantime, Klinefelter said although there’s going to be a value focus, the fundamental winners this year in the retail sector are going to be the discount specialty retailers.

“It’s been down-trending for about 3 years,” he said. “We’ve been in a fashion recession and so we think there’s going to be some natural replenishment that kicks in this fourth quarter.”

Klinefelter Likes:

Kohl’s

Ross Stores

Aeropostale

Klinefelter is Cautious About:

Under Armour

Action Sports

Pacific Sunwear

Quicksilver

Disclosure:

Klinefelter's firm makes market in the securities of all the companies mentioned above, and will buy and sell the securities of these companies on a principal basis.

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