Consumer Nation

Winning Retail Stocks for 2010: Senior Analysts

As investors look for the retail sector to rebound in 2010, Jeff Klinefelter and Mitchell Kaiser, senior retail analysts at Piper Jaffray, shared their picks and pans for the New Year.

Retail Outlook 2010

Klinefelter Likes:

Target — Klinefelter is encouraged by the discounter's recent pickup in apparel and home goods sales, which account for about 40 percent of the store's sales.

"We think the trade's going to come back from Wal-Mart to Target as this discretionary recovery continues to evolve," he said.

American Eagle — The teen retailer didn't see much topline growth in 2009, but it's starting to pick up, he said.

Guess — This stock is a global play, as Guess stores are growing quickly in Europe and Asia. "We think that's going to be important for 2010 for consumer stocks in general, to have that kind of growth outside the US," he said.


Aeropostale — The lower-priced teen store has performed well over the past two to three years, but Klinefelter predicts it will be outperformed by competitors in the next fashion cycle.

JCPenney — JCP has been underperforming other discounters such as Kohl's , and it will see increased competition from higher-priced department stores such as Macy's as consumer sentiment improves.

"While we do think apparel as a category is going to relatively outperform in 2010, there are certainly going to be names that are going to lag," Klinefelter said.

Kaiser Likes:

Best Buy — Kaiser likes consumer electronics as a category, and despite what bears are saying, he thinks there will be newness in the product cycle, he said.

Costco — "They took pricing down when they saw traffic decline, so they've got very easy [comparisons]," Kaiser said.

hhgregg — The regional consumer electronics and appliance store will expand about 40 percent in 2010, he said.


Cabela's — When President Barack Obama got elected, sparking worries about stricter gun laws, there was a very strong demand for guns, Kaiser said. "It's going to be difficult for retailers who had strong sales to anniversary those sales," he said.

Tractor Supply — 2009 was also a good year for the retail farm and ranch store, and Kaiser thinks it will be difficult for the company to lap its sales.

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