“We’ll own names like Costco and Target on the defensive side of that barbell, and we’ll own a Macy’s and Nordstrom on the other end,” he said.
Asked about a possible takeover target, Grom named Big Lots.
“The stock has massively underperformed. It’s very cheap,” he said. “It’s a model that probably needs to get fixed.”
Among his other top picks were Dollar Tree and Whole Foods.
“There’s definitely a paradigm shift going on out there toward healthy eating,” he said.
On the other end of the spectrum, names to avoid include JCPenney “in the mid-20s.”
“We’d also avoid some of the traditional grocers that we think have big secular challenges, such as a Safeway or Supervalu ,” he said.
Trader disclosure: On Oct. 16, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s “Fast Money” were owned by the “Fast Money” traders: Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long CSCO; Tim Seymour is long YHOO; Tim Seymour is long SBUX; Tim Seymour is long VALE; Dan Nathan is long AAPL OCT 700 CALLS; Dan Nathan is long C NOV 36/34 PUT SPREAD; Dan Nathan is long GS OCT/NOV 115 PUT CALENDAR; Dan Nathan is long JPM OCT/NOV 41 PUT CALENDAR; Dan Nathan is long MS JAN 10/5 PUT SPREAD; Dan Nathan is long YHOO JAN 17.5 CALLS; Dan Nathan is long FB NOV/JAN 22 CALL SPREAD; Dan Nathan is long WFM 95/85/75 PUT FLY; Joe Terranova is long VRTS; Joe Terranova is long WFM; Joe Terranova is long SBUX; Joe Terranova is long NFLX; Joe Terranova is long SWN; Joe Terranova is long TRV; Joe Terranova is long VZ; Joe Terranova is long XOM; Joe Terranova is long CVX; Joe Terranova is long COP; Joe Terranova is long SU; Joe Terranova is long CSTR; Joe Terranova is long NXPI; Joe Terranova is long EMC; Joe Terranova is long GS; Joe Terranova is long CHKP; Joe Terranova is long SNDK; Joe Terranova is long GLW; Steve Grasso is long AET; Steve Grasso is long ASTM; Steve Grasso is long AUO; Steve Grasso is long BA; Steve Grasso is long F; Steve Grasso is long LF; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long MPC; Steve Grasso is long P; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long WYNN;
For Charles Grom
COSTCO: Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from Costco Wholesale Corporation within the past year; DOLLAR GENERAL: Dollar General Corp is an Investment Banking client of Deutsche Bank Securities; GNC: GNC Holdings, Inc. is an Investment Banking client of Deutsche Bank Securities; JCP: JC Penney Company Inc is an Investment Banking client of Deutsche Bank Securities; Deutsche Bank and/or its affiliates own 1% or more of JC Penney Company common equity securities; SAFEWAY: Deutsche Bank (and/or affiliates) own 1% or more of Safeway Inc common equity securities; Safeway Inc is an Investment Banking client of Deutsche Bank Securities; Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from Safeway Inc; Safeway Inc has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services; SUPERVALU: Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from Supervalu Inc; TARGET: Target Corporation is an Investment Banking client of Deutsche Bank Securities; Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from Target Corporation within the past year; Target Corporation has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.
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