Retail's having its worst month in nearly 5 years, but there are opportunities in the group

Retail is getting crushed amid the broad market sell-off.

The group is down nearly 9 percent since the start of October, on track for its worst monthly performance since January 2014. Among the names hardest hit within the XRT this month included Stitch Fix, Wayfair, DSW and Tiffany.

But some say the future of retail stocks, at least in the near term, looks promising.

"I really expect the surge in retail to continue, because at the end of the day the consumer story hasn't changed at all," said Mark Tepper, president and CEO of Strategic Wealth Partners.

Tepper is particularly bullish on shares of Nordstrom, a legacy retailer he believes has evolved with changing customer needs.

"Customers want experience now more than anything, just like that Starbucks effect, and you get that at Nordstrom," he said Thursday on CNBC's "Trading Nation."

Shares of Nordstrom have surged 30 percent this year, handily outperforming the broader retail space as tracked by the XRT. The stock is trading at a forward price-earnings ratio of 16, which Tepper finds reasonable.

The state of the consumer is relatively healthy, said Gina Sanchez, CEO of Chantico Global, and that gives her reason to believe retail names will likely rebound and head higher.

"We're looking at the retail story, really looking at who can be more robust in keeping the margins up, but also keeping pace with the higher growth. And the higher sales growth continues to be online; 20 percent versus 15 percent expected from brick-and-mortar stores. So it's a still a great story, but I think you have to be selective," Sanchez said Thursday on "Trading Nation."

The XRT was down 1 percent Friday.

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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

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