×

Turnaround for retail? Traders weigh buying into the rally

The "Fast Money" traders debated whether it's time to chase the rally in retail.

The SPDR S&P Retail ETF has gained nearly 12 percent since June 27.

Trader Pete Najarian said that investors are still looking for cheap stocks with a dividend yield. In particular, Najarian said that the companies with off-price businesses like Nordstrom Rack and TJX are better positioned. Shares of TJX hit an 52-week intraday high of $80.93 on Monday.

Trader Tim Seymour said that a lot of these retailers are starting to see their online business "working out." He cautioned investors about piling in because this rally isn't proof that "they've turned it around over night." Seymour said he likes Macy's the most in this sector because it has the best balance sheet and valuation.

Even though these stocks are rallying, Trader Dan Nathan said he doesn't think investors should "chase any of them." He said that while there may be some incremental improvements, "they have the wrong business models."

Nathan said it's better to "stick with the things that have worked." He prefers Home Depot, Costco, Target and Wal-Mart in the retail sector.

Disclosures:

PETE NAJARIAN

Long stock: AAPL, BAC, BMY, CSCO, DIS, DISCA, GE, KMI, KMI.A, KO, LUX, MRK, PEP, PFE, VIAB, long calls: AAL, AKS, AMJ, ANF, CHK, CIT, CLF, COP, DAL, DVN, GILD, GPS, HALO, HOG, INTC, KGC, LLY, MAS, MCD, MPEL, MRO, MT, MU, NGD, NTAP, P, PG, SCHW, SLV, SLW, TMUS, VLO, XLE, YELP, puts: CS, NLY, EEM

TIM SEYMOUR

Tim Seymour is long APC, AVP, BAC, BBRY, CLF, DO, DVYE, EDC, EWZ, F, FCX, FXI, GM, GOOGL, GRMN, GE, INTC, LQD, M, MCD, MPEL, NKE, RACE, RAI, RH, RL, SINA, T, TWTR, UA, VALE, VZ, XOM and hort: SPY, XRT. His firm is long ABX, BABA, BIDU, CLF, EWZ, F, HD, KO, MCD, MPEL, NKE, PEP, PF, SAVE, SBUX, SINA, VALE, VIAB, WMT, WEN, YHOO, short HYG, IWM

DAN NATHAN

Dan Nathan is Long JD Aug call spread, Long TWTR, BABA Aug put spread, IWM long Sept put, XLF long Aug put spread, XLK long Sept Put spread, FXI long Aug put spread, SMH long Aug put spread, long PYPL call calendar, long C Aug put spread, XOP Sept put spread, TGT long Aug calls, TSLA long Aug put, BAC long Sept put, Long FEZ Nov put spread.

GUY ADAMI

Guy Adami is long CELG, EXAS, GDX, INTC. Adami's wife, Linda Snow, works at Merck.