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Trading the consumer: 5 stocks to watch

As retail earnings create an uncertain outlook for the U.S. consumer, "Fast Money" traders are sticking with what has worked this year.

Shares of Home Depot and Wal-Mart both popped on Tuesday after the companies beat earnings estimates. But recent reports from Macy's and Nordstrom, among others, painted a more gloomy picture of the U.S. consumer.

Despite the uncertainty, home improvement retailers should rally, said trader Tim Seymour. He would stick with Home Depot, even after a 20 percent climb this year.

Trader Steve Grasso also sees opportunity in consumer stocks that have beaten the market, despite high valuations. While the S&P 500 is down slightly this year, sports apparel makers Nike and Under Armour have soared 27 and 25 percent, respectively.

Nike shoes on display at the Nike headquarters showroom
Jessica Golden | CNBC
Nike shoes on display at the Nike headquarters showroom

Shares of Foot Locker, which sells Nike products, also benefit from the sportswear surge, said trader Karen Finerman. The stock has climbed about 6 percent this year.

Grasso also sees upside in teen retailer American Eagle. Its shares have risen more than 4 percent this year.

Disclosures:

Tim Seymour (Sold Nokia)

Tim Seymour is long AAPL, BAC, CLF, DIS, F, FCX, GE, GM, GOOGL, INTC, JPM, KO, LGF, T, TWTR, VRX. Tim's firm is long BABA, BIDU, MCD, NKE, SBUX, YHOO.

Dan Nathan

Dan is long CSCO Feb calls, EEM Dec put spread, INTC Dec put spread, M long Jan calls, XLF Dec put spread, IWM Dec put spread, XLI Dec put spread, XLU Dec call spread, TWTR March call spread, TWTR, Paypal Jan Risk Reversal

Steve Grasso

Steve is Long AAPL, BA, BAC, CC, DD, DIS, DECK, EVGN, FIT, KBH, MJNA, MBLY, MU, OLN, PFE, PHM, T, TWTR, GDX firm is long BP, COP, CVX, FCX, MCD, OXY, RIG, SHLD kids own EFA, EFG, EWJ, IJR, SPY

Karen Finerman

Karen is long BAC, C, FL, GOOG, GOOGL, JPM, KORS, KORS call spreads, M, SEDG, URI, she is short SPY, Her firm is long ANTM, AAPL, BAC, C, DIS, DIS puts, FL, FL calls, GOOG, GOOGL, GPS, JPM, KORS, KORS call spreads, MA, URI, URI long puts, WFM, her firm is short IWM, SPY, MDY, USO, XRT, Karen Finerman is on the board of GrafTech International.

CORRECTION: This version corrected the hyperlink to Foot Locker's stock price.