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5 Rocket Stocks to Buy After the Selloff

Kohl's

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2013 has been a strong year so far for Kohl's (KSS). Shares of the big box department store chain have rallied almost 18% since the calendar flipped over to January, significantly outperforming the rest of the market. The firm's model is built off of selling well-known brand names at moderate prices to middle income consumers through its 1,150 stores. Kohl's value focus makes it a defensive retail name for the start to this summer.

>>5 Buy Signals From the Consumer Sector

There's a lot that differentiates Kohl's from your typical department store. First off, product exclusivity is paramount -- around half of the firm's sales come from private labels or brands sold exclusively at Kohl's. That, in turn, gives the firm bigger margins and more defensible profitability. So do the firm's store locations: Unlike most of its peers, Kohl's doesn't typically anchor mall locations, cutting its overhead and helping the firm follow through on its cost focus.

Moats are relatively shallow in the retail business, but Kohl's unique positioning gives it much bigger advantages than the typical department store. That fact shines through to KSS' balance sheet too. Financially, Kohl's is in good shape, with a $4.5 billion in debt and a half billion in cash sitting on its balance sheet; that's a comfortable amount of leverage for the industry, especially with free cash flows north of $2 billion on tap this year.

While retail isn't without its risks right now, the defensive bent at KSS makes it stand out.

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