Retail stocks: An investor's holiday shopping list

Looking for a cure for the retail blues?

Despite a parade of disappointing headlines coming out of the sector in recent weeks, it's not all bad for investors who want to buy retail stocks ahead of the holidays.

A shopper looks at Michael Kors handbags at Macy's flagship store in New York.
Scott Mlyn | CNBC
A shopper looks at Michael Kors handbags at Macy's flagship store in New York.

Nomura analyst Simeon Siegel on Tuesday identified three brands the firm thinks provide the best opportunity in retail for the remainder of the year, which promises a competitive environment with huge pressure to keep up promotions despite leaner inventories.

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Among his coverage universe, Siegel named the firm's best ideas for the end of the year as:

Michael Kors: Expectations are low at the affordable luxury brand, which has been pegged by analysts as nearing its maturity in the U.S. Siegel said the Street is already pricing in contraction in the company's gross margins, which have contributed to about a 35 percent decrease in its share price since the stock hit a peak above $100 earlier this year.

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Chico's: Similar to Kors, investors are already pricing in gross margin contraction at the parent company of Chico's, White House Black Market and Boston Proper, which came largely as a result of heavy promotional activity. The company's shares are down about 7 percent compared with one year ago.

Signet: Fears surrounding the overall sector, combined with uncertainty related to Signet's recent transition at the CEO post, have created an "attractive" entry point into the jewelry brand, Siegel said. It's currently trading near $110.

As consumers continue to seek out deals, discount retailers are also expected to ring in big bucks this holiday. The National Retail Federation said in its annual consumer spending survey that the channel will once again be the top place for consumers to spend this holiday, followed by department stores.

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As such, JP Morgan analyst Matthew Boss told CNBC last week that Macy's is well-positioned for the holiday; as are Ross, TJX and Burlington, which sell brands for less. He expects shopper frugality will also translate well for dollar stores and said the athleisure trend bodes well for companies such as Nike and Foot Locker.

"I think athletic is what's working," Boss said.