Wedbush's Favorite Retail Stocks Despite 'Poor Start' To Earnings

In a new report, analysts at Wedbush took a look at softline retailers. With earnings in the space weak so far, analysts believe that expectations are extremely low for the companies that have yet to report. The report includes Wedbush’s top three stocks to buy before earnings.
Lowering the bar
Of the ten retailers that have reported so far, nine of the stocks have fallen following their respective reports. The disappointment has produced an average downside of 4.6 percent for shareholders. However, analysts believe that the risk to the stocks that have yet to report will be limited.
“While the market appears to have taken the approach of selling first and asking questions later in response to softening top-line reports, we believe that the magnitude of risk is likely reduced going forward, at least for those retailers that manage to meet or exceed consensus sales expectations,” analysts explain.
“Solid beat” from Express?
Analysts believe that Express Inc EXPR is set up well for an earnings beat based on strong store checks throughout the quarter. In addition, analysts believe that off-price department stores will continue to outperform the broader retail segment.
Stock picks
Wedbush has Outperform ratings on the stocks of Express, Ross Stores Inc ROST and the TJX Companies Inc TJX ahead of earnings.
Wedbush has Hold ratings on ANN Inc ANN, The Buckle Inc BKE, Chico’s FAS Inc CHS, The Gap Inc GPS, Michael Kors Holdings Limited KORS, L Brands Inc LB, Urban Outfitters Inc URBN and Zumiez Inc ZUMZ.