Watch For Young, Rich Retail Stocks


A retailers ability to attract youth and wealth can make their stock all the more attractive to investors according to Christine Chen, vice president of equity research for specialty retailing at Needham and Company.

"We are biased toward the teen retailers and the luxury retailers, because we think teens have no concerns about the economy," she told CNBC. "Mom and Dad don't want to disappoint kids, and teens will continue to spend, or Mom and Dad will continue to spend on kids. Luxury: We don't think the luxury consumer has gone away, and they have the money to spend for the holidays."

For those reasons, Chen likes Aeropostale and Guess.

"Some retailers promote to get people into the store, like Aeropostale," Chen said. "But they buy to promote, and they get the traffic on Black Friday from the lower-end consumer," she said.

"Guess continues to be one of our favorite names," she said. "We have a 'strong buy' on it. In addition to an international business, their domestic business is doing very well."

Perhaps the most important criterion for retail stocks, Chen said, is simply having a quality product that consumers want.


"I am a big believer that if you have the right product, shoppers will come," she explained. "A big example over the weekend was Coach and Abercrombie and Fitch. Neither one of them ran Black Friday specials, but people were there, shopping and buying merchandise at full price, and I have reason to believe they will continue to do so and both companies will have a great holiday."

Chen personally owns Guess and Coach.