Here’s why retail earnings could surprise investors

The next wave of quarterly earnings due out is largely from the consumer discretionary sector. Fort Pitt Capital Group senior portfolio manager Kim Forrest is bullish on the group, particularly if some upcoming economic data reflects continued economic growth. Here's why.

Wendy's and Urban Outfitters are two stocks in the consumer discretionary space set to report earnings in the coming weeks. Forrest said Tuesday on CNBC's "Trading Nation" that they should both stand to benefit from improving economic conditions and disposable income.

• "The general economic condition looks relatively strong. We had a great GDP number coming in from last quarter, and we're thinking that people may have picked up additional jobs, or perhaps they've gotten a raise," Forrest said.

• She will also be closely watching consumer sentiment data due out this Friday from the University of Michigan, which will indicate to her health for the sector. If consumers are "happy enough and employed, they tend to spend," which should reflect a strong number, she wrote in an email to CNBC.

• "Consumer credit stocks that have been pretty beaten-up this year might be something you want to take a look at," Forrest said.

Bottom line: Forrest is bullish on the consumer discretionary sector and some upcoming retail earnings because of a relatively strong economic backdrop.

Kim Forrest's firm owns shares of Wendy's and Urban Outfitters.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more