Ken Hemauer, co-portfolio manager at Baird Midcap Fund, sees four stocks that will profit from Black Friday and beyond, despite the expected weakness in overall holiday retail sales.
"The way we’re approaching things isn’t figuring out the next four weeks," he told CNBC Monday, but picking businesses "that have been doing well and can continue doing well into next year."
Those would be Dick's Sporting Goods, Tractor Supply Co., Dollar General, and Amazon.com.
His four picks have two things in common: opportunity for long-term growth and good business execution.
For instance, Dick's and Dollar General are "managing the margins well," said Hemauer, whose fund has a four-star rating from Morningstar. "While they’re not dependent on the fourth quarter as a retail play, we think those are the kinds of businesses that can work through this environment and be long-term, good stocks."
Tractor Supply , meanwhile, has managed to carve out a profitable niche — retail farm and ranch — that really has no competition.
"They've done a nice job of executing," Hemauer said, and have a "runway for growth" from increasing store expansion.
As for Amazon , which has already warned investors it doesn't expect to make a lot of money from its Kindle Fireanytime soon, Hemauer acknowledged, "They've clearly given investors cause for patience."
From a retail standpoint, however, the Fire is "attractively priced" and will be a way of directing consumers to other Amazon products. That's why "our view is over time is the broad growth of that company is very attractive," he said.
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Disclosure information was not available for Ken Hemauer or his company.