Ann Taylor (NYSE:ANN), Abercrombie & Fitch (NYSE:ANF), Macy’s (NYSE:M) FBR's Top Specialty Retailers

Talking retail consumer stocks FBR Capital gave their nod in the specialty retail to Ann Taylor (NYSE:ANN) and Abercrombie & Fitch (NYSE:ANF), while in the department store segment they like Macy’s (NYSE:M)

FBR said, "After two years of significant outperformance, we believe performance for consumer discretionary stocks will be more selective in 2011. We have experienced two years of earnings recovery, and, for the most part, earnings trends should begin to normalize in 2011. Many retailers and wholesalers have recovered merchandise margins and cut SG&A, but sales growth is contingent on incomes, which will obviously increase with jobs. Job growth has been meager, and unemployment remains heightened, therefore we would expect spending trends to improve at a modest pace. Additionally, product cost inflation has emerged as a threat to margins in FY11. Given this backdrop, the focus is primarily on share gainers and secular growth stories and companies that are well positioned to handle product cost inflation.

"Our specialty retail recommendations are Ann Taylor (Outperform) and Abercrombie & Fitch (Outperform). In the department store group, we like Macy’s (Outperform)."

AnnTaylor closed Wednesday at $27.17, up $0.05, or 0.18 percent. Abercrombie & Fitch closed at $54.71, down $0.43, or 0.78 percent. Macy's ended the session at $25.27, up $0.09, or 0.36 percent.