Rise Ahead for Electronics Retailers

Right now, I have my sights on a couple of electronics retailers that both fundamentally and technically look poised for a move up:

• GameStop (GME Quote): This retailer of video-game products and PC entertainment software operates 4,490 stores. It has a $4.4 billion market cap and a weekly chart that looks spectacular.

• Circuit City (CC Quote): The powerhouse retailer sells brand-name consumer electronics, personal computers and entertainment software. It carries a P/E ratio of 25 and a miniscule 0.05 long-term debt-to-equity ratio. Technically, the stock is in recovery mode, but is making headway to the upside.

• Guitar Center (GTRC Quote): The company, which sells guitars and amplifiers as well as percussion and electronic instruments, operates 183 Guitar Center stores and 90 Music and Arts Center stores. Its 17.7 P/E makes it one of the most undervalued plays in the group. Like Circuit City's, its shares are technically in recovery mode but are gaining ground.

With staggering results for December providing solid momentum, the electronics retail group is looking good right now. Next week, I'll drill more deeply into the group for potential big movers. In the meantime, don't forget to do your own research!

An Update on Apparel Retailers and the RTH

Most apparel retailers did a lot of crying and complaining about the warm weather, which was supposedly crushing their sales during the 2006 holiday shopping season. Despite all that, December sales for the group were up a respectable 5.5% compared with the year-ago period. While that's not the greatest result in the world, it certainly wasn't the 2.5% to 3% gain that I expected the group to bring home for December. So if you're looking for a way to get started with some top-notch apparel retailers poised for a move up, take a look at last week's column for some ideas and updates.

As I mentioned in my column in early November, the Retail HOLDRs (RTH Quote) -- a good proxy for the retail group as a whole -- looked golden once it broke above stubborn resistance at $101 on a weekly chart. Good news! The RTH has now broken above that level with recent trades in the $102 area. That makes it very attractive and a great way to get involved in the sector as a whole.