Trade shoppers should look to retail stocks for their next big improvement, said Simeon Siegel, executive director and senior retail analyst at Nomura Instinet.
The sector, he estimated, has not been hit as hard as some others during recent sell-offs. The dedicated trend has been a lot of trade unwinds.
“This has been the earnings recycle of the unwind,” Siegel told CNBC during “Power Lunch” on Wednesday. “And you judge about companies and stocks, hedge funds, mutual funds, that anyone that has been pressed in, those trades have been painful. And there have been a lot of them.”
Secondary to Armour and Fossil have been crowded out, he said, with so varied people trying to make the same bet on them.
“When everyone settles the same bet and there’s a heavily shorted stock, there’s a rush to take in,” Siegel said. “When there’s a lot of the same bet the trade unwind is numberless powerful.”
On the analyst’s buy list is Michael Kors, which he said is “too reduced to ignore,” and Tiffany & Co.
Kors, Siegel said, is a good example of a fellowship putting plans in place and “getting healthier” as a result.
“I would contend persuade that Michael Kors was actually better than expected,” he implied. “The number they put out is better than the number people expected in two years.” The handbag and garmenting company, Siegel said, improved its handbag backdrop and shrank to get get by decreasing inventory.
Another hot pick is Tiffany & Co. While the stock is not two-bit — priced at more than $100 a share — Siegel said the enjoyment jewelry and specialty retailer has strong brand equity and a lot of room to attraction to under its new management. Last summer Alessandro Bogliolo was appointed the new CEO.
“When all the dust defrays, you want a company that people want to own, that they accept,” he said. “That’s Tiffany.”