Two Beaten-Down Retailers

Regular readers know that I am not a fan of the consumer discretionary sector right now. I do not believe the effects of the payroll tax holiday expiration, various other tax hikes and record gas prices for this time of year have been fully been factored into consumer spending projections. Spending has held up to this point but this will fade towards the end of the second quarter after tax refunds have quit coursing through the economy and job growth slows. There are already signs of stress on the consumer; for example, restaurant sales have been down two straight months.

Some retailers have unfairly been hit hard recently. I do well picking up discarded retail stocks once sentiment has changed and the stocks experience significant declines. I concentrate on leaders in their category or retailers with well-defined niches. I start by accumulating a small position in the beaten-down shares and add on market pullbacks and again after it appears likely the stock has bottomed. I did this quite successfully with Deckers Outdoor (DECK), where I am sitting on a nice gain. Here are two retailers that I will be looking to start a position in this week on the next pullback....283 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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