- Boruchow: Q2 looks more favorable for select retailers
- Some "too cheap" not to buy
- Not bullish on entire retail sector
Retail's had a rough run this year, with the XRT down eight percent year-to-date.
With the sector under pressure, Wells Fargo's senior research analyst, Ike Boruchow, says now's the time to buy some of the names that "have simply gotten too cheap."
He notes that they're not "fundamental bulls on the group," but that names such as PVH, HanesBrands, Signet Jewelers, L Brands, Sally Beauty Holdings, and Ralph Lauren have been selling off, and now show potential upside for the second quarter.
Boruchow argues that as retail stocks begin to stabilize, investors will "flock back" to the increasingly cheap names.
"There were a lot of headwinds in Q1 around late Easter weather and tax refunds that caused a lot of volatility for those businesses but when we look at our group, the setup in the Q2 is much more favorable," he said.
Of the six names, Boruchow names PVH as the best stock to own. Up nine percent year-to-date, it's "growing the bottom line 15%, and taking market share both domestically and internationally." Boruchow went on to say that owning the brand "is kind of becoming sexy again."
"Halftime Report" trader Stephanie Link is hunting for under-valued plays, and on Wednesday she picked up shares of TJX. Countering Boruchow's pick of PVH, Links says that while she likes PVH, she believes that "the risk reward at TJX is better than at PVH."
While Boruchow suggests the tide might be turning for select retailers, he's quick to point out that this call isn't on the sector more broadly. There are "too many high-level concerns around e-commerce penetration and Amazon," he said.
Trader disclosure: Stephanie Link owns TJX and Amazon.