Barclays on U.S. Retail Hardlines: 2011 Outlook-It's Not Hard to be Optimistic
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Rating Summary:
2 Buy, 18 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
Rating Summary:
2 Buy, 18 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
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Barclays on U.S. Retail Hardlines: 2011 Outlook-It's Not Hard to be Optimistic
Barclays analyst said, "Following two years of strong performance for many of the hardline retail stocks (including an average 28% increase in 2010 and a 56% increase in 2009), we think that the momentum will persist in 2011. Most of the subsectors in the universe should benefit from a combination of stable consumption growth, operating expense leverage, and share repurchases. These factors should deliver mid-teens EPS growth for the average hardline retailer. Thus, the combination of healthy earnings expansion and reasonable valuations make this group look attractive."
"Our top picks for the coming year are PetSmart (Nasdaq: PETM), Staples (Nasdaq: SPLS), Home Depot (NYSE: HD)/ Lowe's (NYSE: LOW) and Dick's (NYSE: DKS): We believe that these names are best positioned to benefit from company-specific drivers, along with significant leverage to an economic recovery. Conversely, we believe LifeTime Fitness (NYSE: LTM) and Advanced Auto (NYSE: AAP) offer the least attractive risk-reward at the current levels."
Barclays analyst said, "Following two years of strong performance for many of the hardline retail stocks (including an average 28% increase in 2010 and a 56% increase in 2009), we think that the momentum will persist in 2011. Most of the subsectors in the universe should benefit from a combination of stable consumption growth, operating expense leverage, and share repurchases. These factors should deliver mid-teens EPS growth for the average hardline retailer. Thus, the combination of healthy earnings expansion and reasonable valuations make this group look attractive."
"Our top picks for the coming year are PetSmart (Nasdaq: PETM), Staples (Nasdaq: SPLS), Home Depot (NYSE: HD)/ Lowe's (NYSE: LOW) and Dick's (NYSE: DKS): We believe that these names are best positioned to benefit from company-specific drivers, along with significant leverage to an economic recovery. Conversely, we believe LifeTime Fitness (NYSE: LTM) and Advanced Auto (NYSE: AAP) offer the least attractive risk-reward at the current levels."
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