This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

5 Retail Sector Bargains to Buy Before 2013

Stocks in this article: COSTBBBYLOWRLLTD

Victoria's Secret is Limited's crown jewel. The store chain has a strong brand with celebrity exposure, it operates in the extremely high margin lingerie business, and it sports an economic moat for its trouble. Victoria's Secret should continue to be a prototypical brand as LTD looks to expand its offerings with new store concepts. The decision to sell off the namesake Limited store chain was a big message that LTD management is less concerned with convention than they are with performance -- investors should be very happy about that.

It doesn't hurt that management and investors are one in the same. Founder Leslie Wexner and his wife Abigail own a massive chunk of outstanding shares, keeping incentives skewed towards owners over than management. With LTD trading at a substantial discount to the rest of the sector right now, this stock looks like a solid retail opportunity this month...

Bed Bath & Beyond

Last up is Bed Bath & Beyond (BBBY), another name that's trading at a considerable discount to the retail sector as a whole right now. BBBY spent most of the last two years rallying, only to get a couple of major price haircuts earlier this year on guidance updates. While those declines were rough, they also over-corrected for the multi-year climb that shares had been enjoying. As a result, this stock looks like a bargain with a price-to-earnings ratio of 13 -- and a forward P/E that's teetering on the edge of single digits.

Bed Bath & Beyond's namesake housewares stores sport a nice balance between luxury spending on kegerators and massage chairs and non-discretionary spending on sheets, pots, and pans. Newer store concepts like Buy Buy Baby and Christmas Tree Shops are expanding the firm's core focus, and they provide one of the biggest opportunities for top line expansion right now.

One of the most impressive things about BBBY is the fact that it's managed to build its 1,000-store empire with no debt. Instead, the firm has historically used its own cash to build new stores, a strategy that avoided the super-expansionary downfall of many rivals during the recession and left the company with a spotless balance sheet. As a result, BBBY has the ability to generate a mountain of cash just by cutting down on CapEx for a while. That cash machine should help cut any concerns that investors have about this stock's next rally leg.

4 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,815.07 -2.83 -0.02%
S&P 500 2,068.67 -0.74 -0.04%
NASDAQ 4,758.9460 +4.0540 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs