Smart Retail Plays for Your Portfolio

Brooke Sopelsa|Video Producer

Bill McVail, of Turner Investment Partners, sees good growth prospects in True Religion, a high-end apparel company that is starting to open up its own retail stores.

“The reason we like True Religion is it’s following the same playbook that was really started by Coach and then followed up by companies like Guess.  These are traditionally companies that have been wholesale.”

By opening up its own retail stores, McVail said True Religion can control its own distribution and build other verticals within the store.

“You’re not beholden to your distributor about how much they’re going to buy and do they have too much inventory.”

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McVail also likes clothing company Guess and video game retailer GameStop .

“Gamestop has both great new games coming, and they make money on the used games…it’s a very recession resistant model that will continue to do extremely well in 2008.”

Smart Portfolio Plays

Hank Smith, of Haverford Investments, has a different approach.  He advises investors to focus on quality and strength and invest in companies like Wal-Mart Stores .

“We’re really focusing on large, established companies, and we think that is the right area to be in this economic environment…we still think we’re going to be in a very slow-growth period through the second half of the year, so size is going to make a difference, and we’re seeing consumers trade down to the Wal-Marts of the world, and we think that trend is going to continue.”

In another genre entirely, Smith also recommends Johnson & Johnson , because of its earnings predictability.

“We don’t want to have to worry about whether the economy is going to affect the earnings outlook for companies and with JNJ…we don’t need to worry about that.”