The S&P retail index recently hit a 52-week high after America's major chain stores delivered some of the best sales results in a decade. Patrick Dunkerley, lead portfolio manager at Scout Mid Cap Fund, and Patricia Edwards, CIO and retail analyst at Storehouse Partners, shared their best retail plays.
“It’s a stock picker’s market, especially in retail right now,” Dunkerley told CNBC.
“There’s been a lot of talk about the leading indicators momentum peaking, so that’s a headwind for the consumer stocks that had very good news last month for the same-store sales.”
Dunkerley said investors should look for stocks with good fundamentals and valuations.
In the meantime, Edwards said while the retail numbers look “fabulous,” very few retailers have actually performed well as the results are based off a low comparison from a year ago.
“You want to look for the best operators because it’s going to get more difficult out there,” she said. “That middle-market consumer is getting squeezed and the economy, while it’s getting better, is still not that strong.”
American Eagle Outfitters
Nordstrom —“But I would be cautious in the near-term as valuations have gotten ahead of themselves,” Edwards warned.
Abercrombie & Fitch
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Scout mid-cap owns more than 1 percent of DLTR and AEO shares.
No immediate information was available for Edwards or her firm.