SAN FRANCISCO -- Not to be the Grinch or anything, but things could still get worse for retailers in the next few months.

Banc of America Securities

analyst Tom Tashjian, speaking at his firm's investment conference here Thursday, said the 20% growth estimated for retailers' fourth-quarter earnings per share is still way too rosy.

"That's a good example of

sell-side optimism," he said, well, quite cheerfully. In fact, fourth-quarter EPS growth will probably be more like 7% to 8%, he said. Sell-side optimism isn't, of course, a new phenomenon: Analysts estimated 16% growth for the second quarter when average EPS actually grew around 2%. And they have predicted 21% growth for the third quarter, while Tashjian expects it to show something more along the lines of 4% growth.

Things will likely bottom out around the holidays, says Tashjian, with sales and EPS reaccelerating again in mid-2001. But until then, it could be a yucky few months for a lot of retailers.

Tashjian, however, has his faves. He likes

Dollar Tree

(DLTR) - Get Report

and

Kohl's

(KSS) - Get Report

because they're outperforming the rest of the sagging retailers. And he said

Sears

(S) - Get Report

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, too, could become "a very good place to hide" for investors seeking solace from turmoil elsewhere in the market.

He said

Family Dollar Stores

(FDO)

,

Fred's

and

Dollar General

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also represent good potential investments; any time the minimum wage goes up, as is possible after the presidential election, the discount stores see an immediate lift in same-store sales, he said. And fundamentally, Tashjian likes their impressive return on assets -- in the 15% to 20% range as opposed to about 9% for

Wal-Mart

(WMT) - Get Report

-- and their debt-free balance sheets. (Tashjian rates all of these stocks strong buys, and his firm has done recent underwriting or banking only for Kohl's and Fred's.) All these guys will be on investors' shopping lists when time comes to shift into retail, he said.

Wal-Mart, meantime, is a good long-term investment because it's the ultimate investor gateway to the retail sector. (Tashjian rates its shares a buy, and his firm hasn't done recent underwriting for the company.)