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Top 10 Retail Rocket Stocks

With the holiday season fast approaching, I thought it would be worthwhile to look at some of the retailers that have been severely beaten up these past six months.

Regardless of the economy, a lot of these stocks are trading at 8, 9 and 10 times cash flows, have recently launched stock-buyback programs or have experienced large insider buying. While no one can call a bottom, we can certainly sleep better at night knowing the CEO is confident enough to buy the stock of his own company.

Two weeks ago, Jim Cramer dedicated the opening segment of his "Mad Money" TV show to these lagging retailers. Cramer's logic was very simple: "A Fed rate cut and cold weather could rejuvenate some languishing retail stocks." He also made a strong case that "lower interest rates mean there will be more cash flowing around, making consumers feel richer." And just yesterday, Cramer laid out the case for the sector in a video he recorded for TV: Cramer: Retail Rocks When Times are Tough.

With all of this in mind, let's take a look at a few of these Top 10 Retail Rocket Stocks.

First up is Kohl's (KSS - Get Report), a favorite of mine. About a month ago, Kohl's board approved a $2 billion stock-buyback plan for the upcoming year. The $2 billion represents about 13% of all outstanding shares. This is a massive amount of stock to repurchase and reveals the company's overall bullish tone regarding its own business.

On top of the buyback, Deutsche Bank reiterated its buy rating with a target price of $75 a share. The bank believes that the repurchase plan will add to full-year 2007 and 2008 earnings-per-share growth.

Kohl's is one of the few stores where both middle-class and upper-middle class women shop. Couple this with a huge buyback, and this stock looks very attractive here.
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