Thursday, January 6, 2011

PetSmart (Nasdaq:PETM), Lowe's (NYSE:LOW), Staples (Nasdaq:SPLS), Home Depot (NYSE:HD), Dick's (NYSE:DKS) Top Hardline Retail Picks of Barclays

The momentum for hardline retail stocks like the top picks of Barclays: PetSmart (Nasdaq:PETM), Lowe's (NYSE:LOW), Staples (Nasdaq:SPLS), Home Depot (NYSE:HD) and Dick's (NYSE:DKS) are expected to continue into 2011.

Barclays said, "Following two years of strong performance for many of the hardline retail stocks (including an average 28% increase in 2010 and a 56% increase in 2009), we think that the momentum will persist in 2011. Most of the subsectors in the universe should benefit from a combination of stable consumption growth, operating expense leverage, and share repurchases. These factors should deliver mid-teens EPS growth for the average hardline retailer. Thus, the combination of healthy earnings expansion and reasonable valuations make this group look attractive."

"Our top picks for the coming year are PetSmart, Staples, Home Depot, Lowe's and Dick's: We believe that these names are best positioned to benefit from company-specific drivers, along with significant leverage to an economic recovery. Conversely, we believe LifeTime Fitness (NYSE:LTM) and Advanced Auto (NYSE:AAP) offer the least attractive risk-reward at the current levels."

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