The surprising name that's catching some traders' attention

Summer doldrums? What summer doldrums?

As the S&P 500 hit all-time highsin August, no sector or subsector did as well as specialty apparel retail stocks, boosted by decent quarterly earnings reports.

The S&P 500's subsector is up nearly 13 percent since the beginning of the month while the broader market index is barely up 1 percent. But that doesn't mean this has been a great 2014 for the group; it's basically flat for the year.




Price/Forward Earnings









Ross Stores




Urban Outfitter




L Brands




That's a relief for those who had these stocks, many of which were down from January until the end of August. But looking ahead, which of these is the strongest of the bunch?

Gina Sanchez, founder of Chantico Global, thinks Ross Stores will continue to outperform. Besides being one of the cheapest stocks in the group on a price-to-forward-earnings basis, the retailer hasa strong balance sheet, she said.

"They had some share buybacks and that's been benefiting earnings," said Sanchez, a CNBC contributor. "Also, they have been lowering their cost base, and that's been increasing their margins. Their margins have been generally the lower margins in the specialty apparel. So this is good news."

Ross also project same-store sales to increase between 1 and 2 percent for both the third and fourth quarters. "Those are all great reasons to buy Ross," Sanchez said.

According to Todd Gordon of, the chart on Ross is also very appealing.

"Technically speaking, it's a great-looking chart," said Gordon, a CNBC contributor. He noted the stock "gapped up" last week above $72 per share after the company reported earnings. A "gap up" is when a stock's lowest price on one day is still higher than the previous day's high. Technicals traders see the top part of the gap as a potential support level for the stock. Gordon believes traders should use that level to their advantage.

"We're not quite through the 2014 high," Gordon said. "Look to play a little bit of a pullback that's similar in size to what we saw in August. That's going to be about a $2.50 pullback and that's going to bring us back to the top of the gap. I would like to buy a pullback."

Gordon recommends traders not try to chase Ross shares at the moment. "Buy it at about $73.50," he said, "and then see if you can grab the ride up to new '14 highs."

To see the full discussion on Ross Stores, with Sanchez on the fundamentals and Gordon on the technicals, watch the above video.

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