Take Advantage of Dips in These Retail Giants: Analyst

Retailers posted stronger-than-expected salesfor November as shoppers spent more during the annual Black Friday event. With 22 more days to go until Christmas, what is the outlook for the sector? Peter Benedict, retail analyst at Robert W. Baird, and Charles Grom, broadline retail analyst at JPMorgan, shared their insights.

“If you look at the way retail stocks trade around the holidays, if you get a good move into Thanksgiving, you tend to get a pause in early December— but you also tend to get a rise into the end of the month,” Benedict told CNBC.

Benedict advised investors to take advantage of dips in names such as Target and Costco to build positions for a rally later in the month and into next year.

In addition, Benedict said upscale retailers are likely to benefit during this Christmas season.

Grom: Expect a Pause

Meanwhile, Grom said while it is encouraging to see that this year’s Black Friday was one of the best in many years, he also expects a pause in the sector.

“The group is a bit of a sell right now,” he said. “Most of the [retail sales] numbers were pretty good, but most people expected that number today.”

“I’m not saying December won't be good—it will be—but stocks are discounting a lot of good news already.”

Scorecard—What They Said:

  • Benedict's Previous Appearance on CNBC (Nov. 17, 2010)
  • Grom's Previous Appearance on CNBC (Nov. 4, 2010)

More Retail-Sector Analysis:

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Benedict has investment banking clients who own shares of TGT and WMT. In addition, Robert W. Baird maintains a trading market in the securities of TGT and WMT.

No immediate information was available for Grom or his firm.